FTC Pyramid Cases Post-Amway

In the last 42 years, the FTC has filed 32 cases against MLMs alleging that they were operating illegal pyramid schemes. In all of these cases, the FTC also alleged that the defendants made false earnings representations.

In 20 of these cases, the FTC filed motions for a temporary restraining order (TRO) and obtained that relief 18 times. It also succeeded in obtaining preliminary injunctions in 22 of its pyramid scheme cases.

In 30 of the 32 cases, the FTC either won on summary judgment or at trial, or obtained a favorable settlement, with most settlements occurring within a year of the FTC filing its case. (In fact, in five cases, a settlement agreement was filed simultaneously with the complaint.) In only one of the cases, the court found that the FTC failed to provide enough evidence to support its claims and entered judgment in favor of the company following a bench trial. One case remains pending.

*Characterized as a modified TRO

**After the FTC presented its evidence at trial and rested, the case settled before defendant put on any defense case.

*** Neora’s (aka Nerium’s) lawsuit against the FTC was dismissed in August 2020. The complaint, which was filed on the same day the FTC sued the company, alleged that the FTC was attempting to improperly change direct selling laws. In the dismissal order, the court found that the company’s claims were not ripe for adjudication and that the company could properly defend itself against allegations that it is a pyramid scheme in the agency’s enforcement action currently pending in Texas federal court.

**** The FTC’s lawsuit against Neora (aka Nerium), which was originally filed in New Jersey federal court, was transferred to Texas federal court.

Note: This table does not include the action the FTC brought against Kevin Trudeau and Global Information Network in 2003 because the FTC’s formal complaint did not allege that the company was a pyramid scheme and the court never decided the issue.