International cooperation closes internet health cure scam

25 August 2009

International cooperation between Australian and American agencies has shut down an internet medical eBook scam.

The Australian Competition and Consumer Commission has obtained final orders, by consent, in the Federal Court of Australia against two individuals, Leanne Rita Vassallo and Aaron David Smith of Cecil Hills, New South Wales, for false, misleading and deceptive conduct in relation to a health cure scam.

The scam was brought to the ACCC's attention by the Washington State Attorney General's Department and our investigation was carried out in conjunction with them. They have also filed their own proceedings against Ms Vassallo and Mr Smith in the King County Court, Washington State, US.

The ACCC has also been working with the NSW Police.

The ACCC's court action alleged that over two years Ms Vassallo and Mr Smith operated a large number of websites selling eBooks containing claimed cures for a wide range of health conditions including acne, asthma, multiple sclerosis, fibromyalgia, menopause and prostate cancer.

The court was satisfied that Ms Vassallo and Mr Smith sold the eBooks to more than 60,000 consumers internationally.

The websites were similar as each was dedicated to a particular medical condition. They featured a person who had supposedly suffered from the condition and had purportedly discovered an effective home remedy. Across a number of different websites the photograph of the author was the same, but with different names. The websites also contained testimonials from happy users of the eBooks. The testimonials were from the same people across numerous different websites. The ACCC's expert evidence was to the effect that the treatments would not have any therapeutic benefits for, or medical efficacy in the treatment of the health conditions.

On 30 July 2009 before Justice Moore, the ACCC obtained interlocutory injunctions, by consent, restraining Ms Vassallo and Mr Smith from engaging in the conduct on any website pending final hearing.  The injunctions also required the respondents to take down the websites.

At the final hearing on Thursday 20 August 2009, Justice Graham, in an ex tempore judgment, found that Ms Vassallo and Mr Smith had engaged in false, misleading and deceptive conduct.

He described them as "purveyors of quack medical advice and of quack medicine."

He reached the conclusion that the testimonials were plainly contrived. He noted that the evidence showed that the respondents had received more than $US 1 million from the sale of the eBooks.

Justice Graham also made injunctions on a final basis preventing the respondents from making these or similar representations in the future. The respondents were also ordered to pay the ACCC's costs.

ACCC chairman Graeme Samuel said: "This is a warning to all internet scammers. It is becoming more and more common for agencies such as the ACCC to work with international agencies to bring about the demise of international scams like this."

Release number: 
NR 205/09
ACCC Infocentre: 

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Media enquiries: 
Mr Graeme Samuel - (03) 9290 1812
Ms Lin Enright - (02) 6243 1108