FTC Eyes Alleged "Tiny Belly" Con Artist -- but Not the Big Media Who Helped Him
The FTC is going after those ubiquitous web ads that say "1 Trick of a tiny belly" with an animated woman in a bikini losing weight. They're a scam, of course, but the feds are only looking at the alleged con artist running the scheme, not the web ad agencies or the media companies who have earned millions of dollars helping him out.
The litigation illuminates how much of the web ad economy is based on fraud, and is assisted by the blind eyes of major media companies such as MSNBC, the Los Angeles Times and Weather.com.
The FTC alleges that Circa Direct, a company owned by Andrew Davidson of Margate, N.J., has perhaps taken $1 billion from naive consumers who believed that drinking acai berry juice would help them lose weight, or that Google would pay them to work at home, or any of dozens of other diet and get-rich-quick schemes.
Davidson placed his ads through Pulse 360, a digital media buying company. Pulse 360 isn't a scam house -- it's a legitimate media buying agency that counts Comcast and CBS* as clients or customers. Circa also placed its ads via SuperMedia, which is best known for Switchboard.com and other legit directory sites. The FTC's application for a restraining order against Davidson says:
Mr. Davidson also has negotiated deals with advertising companies, including Pulse360, Inc. and SuperMedia LLC, on behalf of his company Circa Direct to place advertisements on a broad range of web sites, including superpages.com, latimes.com, msnbc.com, and weather.com.An exhibit in the case says that "Pulse 360 received $6,255,322.66 in revenue from Circa Direct for online advertising services." Another target, Ricardo Jose Labra of Grand Rapids, Mich., allegedly spent $778,000 on advertising.
On the web, $6 million makes you a major advertiser. Even Facebook takes a piece of the action. Earlier this year, the social network's third largest advertiser was an alleged scam site called "Make-My-Baby.com." Its ninth largest was "Official IQ Quiz." To be clear, Facebook is not implicated in any way by the FTC's current action. But we've all seen spammy weight-loss ads on Facebook.
Guilty knowledge
You might say that media providers cannot be held responsible for checking their clients' claims. That's true, until the point at which the media providers develop guilty knowledge that they're conspiring in a scam. That may have occurred in December 2009, according to internal emails from Pulse 360 filed as exhibits to the FTC case.
In one email, Pulse 360 executive Joe Burton told "drewjdk2k@gmail.com" (allegedly an email contact for Circa) about complaints his agency was getting from customers that their credit cards were being dinged with unauthorized charges and no one will return their calls. The email was titled "Disgruntled customers." it said: "Can you help out here. If rubicon keeps getting all these complaints they will shut you down." (Rubicon Project is a web ad serving company that counts eHarmony as a client.) The email chain contained a bunch of emailed complaints from customers.
The weight-loss scams aren't hard to spot, according to the FTC:
... such claims approach physiological impossibility, even with diet and exercise, because a weight loss of 25 pounds in four weeks requires a daily deficit of more than 3,000 calories, and exercise equivalent to running approximately 25 miles a day to burn the needed calories. This is a far cry from the claim, made in Defendants' advertisements, of achieving such dramatic weight loss with "no intense exercise."And, while we're naming names, plenty of cable TV channels have taken ads for Bobby Waldron's Belly Burner, which makes the almost impossible claim -- via Debi Mazar, of all people -- that you can lose 60 pounds in 10 weeks. Internet scams exist -- and major media is happy to give them a place to pitch their bunco booths.
Circa denies the claims and is fighting the injunction. Pulse 360 appears to be cooperating with the feds. Stay tuned.
*Disclosure: BNET is owned by CBS.
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