PHOENIX—Central Coast Nutraceuticals Inc (CCN) must pay $1,375,000 in fines stemmed from a consumer fraud lawsuit that alleged deceptive online sales practices. The company was ordered to pay $1 million in civil penalties to the state of Arizona, $350,000 in consumer restitution and $25,000 to cover the state’s legal and investigative costs
The record settlement came after Arizona attorney general Terry Goddard received hundreds of consumer complaints. Arizona brought the lawsuit against CCN and its owner, Graham Gibson, of Phoenix in December 2008. Goddard alleged CCN used a variety of deceptive tactics marketing low-cost “risk-free" trial offers of health supplements.
According to the complaints, consumers who purchased the low-cost “risk-free trial offers” of CCN’s health supplements were also charged for costly products and services that they did not request. These included pre-selected “up-sell” products that the consumer had to actively de-select in the online order form to avoid being charged. When consumers tried to contact CCN regarding the unauthorized charges, they often faced hold times longer than an hour and their e-mails never received a response.
In addition to the financial settlement, the agreement prohibits CCN from violating the Arizona Consumer Fraud Act. It also requires the company to clearly disclose to consumers the consequences involved with ordering a trial product from CCN.