Phoenix supplement business settles FTC lawsuit

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By Jim Carr By Jim Carr

PHOENIX -- Graham Gibson is the owner of the Phoenix-based business, Central Coast Nutraceuticals.
Outside his offices, 3 On Your Side wanted to ask him about all the complaints alleging his company was continuing to rip people off, despite our previous news report, and the fact that he settled a consumer fraud lawsuit with the Arizona Attorney General's Office.

Central Coast Nutraceuticals sold nutritional supplements, like acai-berry pills and colon cleansers, online.

It advertised that customers could try the products -- "risk free" -- for $5.

However, customers like Donna Knall say they were surprised when a $45 charge showed up on their credit card. Some consumers say the charges went on month after month.

It's a fee Knall says she never realized existed because it was buried in the fine print.

"Misleading, that's the word I like to use," she said. "At first, I used the word, and then I realized it wasn't really a scam, but it was definitely misleading and just not an honest company.”

Not long after 3 On Your Side caught up with Gibson, the Federal Trade Commission got involved and shut down Central Coast Nutraceuticals. The agency then filed a lawsuit against Gibson and five other companies he's linked to.

In addition to deceptive sales practices, the FTC also claimed Central Coast Nutraceuticals used celebrities like Oprah and Rachel Ray to endorse their products. Both have denied any affiliation.

This week, the FTC announced it settled its lawsuit against Gibson.

The settlement calls for him to pay a $1.5 million judgment, which is believed to be Graham's net worth. As part of paying the judgment, the FTC wants Gibson to turn over his vacation home in Hawaii, take cash out of his Arcadia home, and forfeit what's left of his company.

If he doesn't comply, the judgment jumps to $80 million, the total amount the FTC says he bilked out of tens of thousands of consumers.

In a statement, Gibson says:

"In order to avoid a protracted legal battle we have chosen to settle with the FTC. Settling does not mean that we agree with the FTC's allegations. We do not. CCN sold many good products to millions of satisfied customers, but settling will allow us to move forward for any remaining unsatisfied customers to receive refunds. Overall, we are happy with the outcome."

The FTC said customers will receive refunds in about six months.