Battling The Real 'Fake News': FTC Reaches Multi-Million Dollar Settlement With Internet Marketers For False Celebrity Endorsements

Unfortunately, the unauthorized use of a celebrity's name and image has become a deceptive advertising practice frequently used by dishonest online marketers. This type of ad typically claims (falsely) that a public figure has used or endorsed what is billed as the latest miracle weight loss supplement or wrinkle-reducing cosmetic. Going after these bad actors to protect one's right of publicity and intellectual property rights can be a challenge, as it can be difficult to identify the responsible parties, and even if they can be found, they may be outside of the reach of U.S. laws or a small operation that appears not worth pursuing. A recent action by the Federal Trade Commission (FTC), however, serves as a reminder that those who peddle in false online endorsements may be part of a larger network that can be identified and stopped.

Earlier this month, the FTC announced that it had reached an agreement to settle charges against a network of internet marketers who for years had allegedly used false and deceptive advertising and billing practices — including the use of fake magazine and news articles and phony celebrity endorsements — to sell its alleged weight loss, muscle-building and wrinkle-reducing products to consumers. The settlement is notable not only for the substantial financial award achieved by the FTC, but also for the breadth of the marketing network involved. Public figures seeking to combat the unauthorized use of their names or images in internet advertisements should take comfort from the FTC's settlement that it is possible to identify the parties responsible for such misconduct and put a stop to their deceptive schemes.

The Network

According to the FTC's complaint, three individuals used a complex network of 19 corporate entities (collectively, the Defendants) to market and sell a variety of purported weight loss, muscle-building and wrinkle-reducing products. The Defendants allegedly marketed and sold their products "through an interrelated network of companies" that were under common control and ownership, and shared officers, managers, employees, call centers, recordkeeping systems, commingled funds and sales practices. The FTC alleged that the three individual defendants controlled each of the corporate defendants, some of which they owned themselves, and others which were owned by family, friends, employees and unpaid interns.

The Defendants marketed and sold their products on their own websites and on those...