Terry Goddard Announces $1,375,000 Settlement with Online Nutrition Company

(Phoenix, Ariz. – June 25, 2009) Attorney General Terry Goddard today announced a record $1,375,000 settlement with Central Coast Nutraceuticals, Inc. (“CCN”) and its owner, Graham Gibson, of Phoenix. The settlement resolves a consumer fraud lawsuit that alleged deceptive online sales practices by CCN.   

Under the terms of today’s settlement, which takes the form of a Consent Judgment, CCN will pay $1 million in civil penalties to the state, $350,000 in consumer restitution and $25,000 to cover the state’s legal and investigative costs.    

After receiving hundreds of consumer complaints, Goddard brought the lawsuit against CCN in December 2008. In it he alleged that 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 deselect in the online order form to avoid being charged.  When consumers tried to contact CCN regarding the unauthorized charges, they often faced hold times over 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.   

“Especially In today’s tough economy, companies cannot use deceptive online advertisements and sales practices to charge customers for products and services they did not agree to pay for,” Goddard said. “I am working to ensure that companies use the web to enhance consumers’ buying experiences, not to mislead them to increase company profits.” 

Consumers who believe they were the victim of CCN’s deceptive marketing must file a complaint with the Arizona Attorney General’s Office by close of business on Monday, August 17 to be eligible for restitution from the settlement. If consumers have already filed a complaint with this office, they will be included in the pool of eligible consumers. We encourage any affected consumers who have not already done so to file a formal complaint with our office. A complaint form can be found on our website at www.azag.gov

Assistant Attorney General Cherie Howe handled this case. A copy of the settlement is attached.