FTC Cracks Down on Net Health Scams

Continuing the government crackdown on cyberscam artists and drug traffickers, the U.S. Federal Trade Commission (FTC) announced Wednesday that it has reached settlements with three Internet companies that were falsely advertising cures for everything from AIDS to cancer.

“The promotions for these supplements as ‘miracle’ cures are really reprehensible because they target people who have very serious, if not life-threatening, health conditions,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “At a time when many health-conscious consumers are using the Web as a source of information, it’s important to remember that claims must be truthful to meet legal standards, whether they’re in the daily paper, on TV, or on the Internet.”

The proposed settlements are open to public comments until May 5th, at which time the FTC will vote on whether to make them final.

Modern Day Snake Oil Salesmen

Hucksters have long preyed upon the fears of sick citizens by offering miracle cures, but the Internet has made it even easier for modern day snake oil salesmen to peddle their wares. The FTC says that in the latest cases, the cyber-scammers used metatags, hyperlinks, and mouseovers to deceive customers.

Natural Heritage Enterprises, based in Crestone, Colorado, was selling Essiac Tea — a mixture of burdock root, sheep sorrel, rhubarb root, and slippery elm bark. The company claimed the concoction would cure cancer, diabetes, AIDS and feline leukemia.

The other two companies, Sarasota, Florida-based CMO Distribution Centers of America, and EHP Products, out of Ashland, Kentucky, were selling cetylmyristoleate (CMO) and claiming that the product could treat diseases such as cancer, hepatitis C, eczema, and sinus drainage.

In addition to claiming that their products had been touted in medical journals and were accepted by the medical community, the companies used high-tech methods to deceive customers.

Metatags loaded with such buzz words as “cancer cure” were used to deceive people who were searching for medical information. Hyperlinks were set up to dummy sites that supposedly authenticated the medical claims made by the hucksters, and one company, Natural Heritage Enterprises, used mouseover text to make false claims.

Operation Cure-All

The settlements announced today are the result of “Operation Cure-All,” an ongoing federal and state law enforcement and consumer education campaign targeting bogus health claims on the Internet. Last year, the FTC announced that an Internet sweep had identified more than 400 Web sites making questionable claims about products used to treat serious diseases.

“The Food and Drug Administration also is deeply concerned about the public health implications of the Internet sales of unapproved drugs where sellers can bypass the public health safeguards set in place by the Congress, the States, and FDA,” said John M. Taylor, Senior Advisor for Regulatory Policy, Office of Regulatory Affairs.

The Penalties

Under the proposed agreement, the government will not be fining the three companies involved. Instead, CMO Distribution and EHP will have to offer full refunds to individual customers and notify their distributors of the settlements. Natural Heritage Enterprises will have to pay $17,500 (US$) in consumer redress and send notices to all consumers who purchased the Essiac Tea Products advising them that Essiac Tea has not been demonstrated to be an effective remedy in fighting cancer or any other disease.

In addition, if the agreement is concluded, it will prohibit the companies from making unsubstantiated representations about the performance, safety, efficacy or health benefits of their products or any other food, dietary supplement or drug.

Arizona Settlement

In addition to the FTC’s settlement, the Arizona Attorney General announced a settlement with a Scottsdale-based practitioner of homeopathy that prohibits him from making false claims about intravenous hydrogen peroxide therapy. The homeopath, Gordon Josephs, was using his Web site to advertise intravenous hydrogen peroxide therapy as an effective treatment for virtually every disease, including fatal, chronic and short-term diseases.

Taking Aim at Drugs Online

While the FTC is targeting sites that make misleading claims about drugs, other governmental agencies have been taking aim at drug peddlers who offer illegal drugs for sale or sell prescription drugs illegally.

President Clinton recently announced plans to put a bill before the U.S. Congress that would give the Food and Drug Administration (FDA) new power to review and certify hundreds of prescription-filling Web sites. Those sites that continue to violate the new regulations would risk incurring $500,000 fines for each infraction.

State governments are also cracking down on online drug dealers. Thirty-one states currently participate in a multi-state working group to track Internet drug sales and to share ideas on how to bring legal action against the companies. Four states — Missouri, Kansas, Illinois, and New Jersey — have filed suit against online pharmacies that sell prescription drugs to residents of their states without valid prescriptions.

In March, the Oregon Medical Board put a doctor on 10 years probation and fined him $5,000 for prescribing drugs such as Viagra over the Internet without first examining patients.