
Multilevel Marketing: The Day Job that Doesn’t Pay
More than 97 percent of DSA member companies use or have used misleading income claims.
See the FTC's track record when it comes to pyramid cases.
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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 has also alleged that the defendants made false earnings representations. Moreover, of those cases, the FTC filed 20 motions for a temporary restraining order (TRO) and obtained that relief 18 times. It succeeded in obtaining preliminary injunctions in 19 of those cases and in three other cases as well for a total of 22 preliminary injunctions granted. In five cases, a settlement agreement was filed simultaneously with the complaint. In 29 of the 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.
*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.
This article was updated 5/18/2023.
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