The Cost of Doing Business
Comparing the amount companies agree to pay to settle deceptive marketing charges with their annual revenue.
MLM company New U Life is no fountain of youth.
Editor’s Note: Updates have been posted at the end of this article.
“We pioneer NEW products that unify body and mind and connect YOU to a transformation that enriches LIFE through opportunity,” boasts New U Life. The Utah-based Multilevel Marketing – a way of distributing products or services in which the distributors earn income from their own retail sales and from retail sales made by their direct and indirect recruits. company founded in California in November 2017 by Alexy Goldstein claims to have more than 94,000 distributors and to have sold over half-a-million bottles of its flagship product, Somaderm Gel, in its first year of business. The company describes Somaderm as “the only FDA registered, transdermal product containing legal homeopathic growth hormone that’s available without a prescription.”
Bold claims from this fledgling company. But can such assertions withstand scrutiny? And has the company and its distributors crossed the line when it comes to making health and income claims? TINA.org, urged by multiple consumer complaints, investigated New U Life.
Here’s what you need to know (click to expand each topic):
New U Life’s website states, “SOMADERM Gel is a powerful, innovative transdermal human growth hormone (HGH) product available without a prescription.” It is a curious statement – especially the part about not needing a prescription.
The DEA has explained that “as part of the 1990 Anabolic Steroids Control Act, the distribution and possession, with the intent to distribute, of hGH ‘for any use … other than the treatment of a disease or other recognized medical condition, …’ was criminalized as a five-year felony under the penalties chapter of the Food, Drug, and Cosmetics Act of the FDA.”
According to the FDA, “Distributing human growth hormone to customers in the United States without the order of a physician is in direct violation of Section 303(e) of the FD&C Act [21 USC § 333(e)] and may be punishable by up to 10 years in prison and applicable fines.” And the FDA is not joking. In 2011, a 78-year-old medical doctor was sentenced to 30 months in prison for distributing HGH and steroids that were being promoted for, among other things, “anti-aging purposes.”
Moreover, the fact that Somaderm is marketed as a “homeopathic” human growth hormone is not a compelling defense. The FDA has stated, more than once, that HGH is not a recognized homeopathic ingredient such that distribution of alleged homeopathic products containing HGH still violate the FD&C Act. In fact, according to the FDA, “[t]here are no human growth hormone products that are approved by the FDA for burning of fat, increasing lean muscle mass, restoring skin thickness, elasticity, smoothing wrinkles, rejuvenating hair, promoting deeper sleep, improving sexual performance, and pleasure.” Nevertheless, New U Life is making such health claims.
The FDA has also stated that trying to categorize HGH as a dietary supplement is a non-starter. The agency explains it like this:
FDA first approved HGH as a new drug in 1940, and HGH was not marketed as a dietary supplement, or as a food, before then. Accordingly, HGH is excluded from the definition of a dietary supplement under section 201(ff)(1) of the FDCA (21 U.S.C. 321(ff)(3)(A)) because growth hormone was an article approved as a new drug under section 505 of the FDCA (21 U.S.C. 355) before its introduction as a dietary supplement.
So, could New U Life or its distributors go to prison for selling a supposed HGH gel? TINA.org doesn’t offer legal advice but we will say this: if you’re selling (or thinking about selling) Somaderm as an HGH product, it’s probably worth checking in with your attorney.
(Note: The best defense for New U Life distributors promoting Somaderm may be that there is no HGH in the gel – more on that below.)
Somaderm is on the FDA’s radar. The Forensic Chemistry Center of the FDA tested Somaderm in January 2019 for identification and quantification of human growth hormone and testosterone, and found that there was no human growth hormone (HGH) or testosterone in the gel. Repeat: there is no HGH in Somaderm Gel or any other drug for that matter. Specifically, the FDA summary report stated:
There was no evidence for the presence of hGH at a level greater than approximately 7 micrograms per gram in the contents of the bottle based on comparison to a corresponding standard using LC-MS. … There was no evidence for the presence of any drugs or poisons in the bottle contents using GC-MS.
This is not a surprising revelation. If one looks at the ingredient section of New U Life’s website, it reports that one of the active ingredients in Somaderm is “Somatropin 30x.” Somatropin is synthetically produced human growth hormone (HGH). The “30x” represents a homeopathic dilution of the HGH – meaning that the somatropin has been diluted (presumably with water) this many times:
In case you were wondering, that’s a nonillion times. Meaning you’d probably only find (at best) about 1 HGH molecule in 8,000 gallons of water, which means, in practical terms, that there isn’t any HGH in Somaderm – as the FDA testing proved. Consequently, consumers are paying $170 for a bottle of gel that is essentially made up of oil and water.
[And that New U Life distributors may just be your “Get out of jail free” card. See point one above for more details.]
Marketing Somaderm as having the ability to treat, cure, alleviate the symptoms of, or prevent diseases is simply not permitted by law. In fact, in 2017, the same year that New U Life opened for business, the FDA listed the following examples of prohibited health claims that were being used to market an alleged HGH cream:
But the law hasn’t stopped New U Life, its founder and distributors from making inappropriate health claims. The internet is littered with marketing material claiming that Somaderm Gel can regrow hair, relieve the symptoms of fibromyalgia, stop migraines, increase bone density, treat arthritis, improve memory and eyesight, disappear anxiety, and treat and/or cure a host of other diseases. TINA.org has amassed a database of well over 100 examples of inappropriate health claims being made to promote Somaderm – even assertions that Somaderm can cure health issues that aren’t actually real, like adrenal fatigue. Incredibly curious claims given that there is no HGH in Somaderm (see points above).
To view the illegal disease-treatment claims, click here. (Note: this database does not include the “secret” Men’s and Women’s private testimonial Facebook groups.)
New U Life and its distributors love to boast that Somaderm is “FDA registered.” (Some even claim that the HGH gel is “FDA approved.”) One distributor explained how it all happened:
In September of 2017, … Alex received final approval from the FDA to manufacture an unlimited amount of the Somaderm Gel and was also given a National Drug Code number for the gel. Ladies and Gentlemen, that is unheard of. Non-drug products don’t usually get NDC numbers assigned but the FDA was so impressed with the history and the results of this gel that they did indeed issue one such number for this product.
Another distributor, “Dr.” Georgia Balsey, Naturopath, explained that:
To have this product [Somaderm] and have it FDA registered is super huge. That never happens. … There has never been, to my knowledge, a homeopathic that’s ever been registered with the FDA – that’s huge. … So, looking for some kind of safety factor – there it is.
These distributors should have stopped at “unheard of” and “never happens” because their assertions are false and incredibly misleading. (Though it appears Balsey later changed her mind about Somaderm, resigned her position, and is now being sued by the company. See below for more information on that.)
Somaderm has never been registered by and/or approved by the FDA. The most that can be said is that someone filled out an online form to obtain a National Drug Code (NDC) listing for Somaderm. And according to that listing, the gel is marketed as an “Unapproved Homeopathic.” The fine print at the bottom of Somaderm’s listing also states: “The product information included in the NDC directory does not indicate that FDA has verified the information provided by the product labeler. Assigned NDC numbers are not in any way an indication of FDA approval of the product.”
Moreover, FDA regulations make clear that “[a]ny representation that creates the impression that a drug is approved or legally marketable because it appears in our database of drugs, has been assigned or displays an NDC, or the establishment has been registration number or Unique Facility Identifier is misleading and constitutes misbranding.” Misleading indeed.
New U Life’s CEO likes to brag that “we are the only real HGH transdermal delivery – the real hormone not a precursor – in the world.” But perhaps New U Life is the only company in the world selling an HGH gel (that doesn’t contain HGH) because it couldn’t actually work. It is not scientifically possible to have a transdermal delivery of HGH into the bloodstream. That is to say, rubbing HGH onto one’s skin would not work to get the HGH molecules to pass through the skin barrier and into the bloodstream.
Here’s the problem: The outermost layers of the skin, known as the epidermis, act as the primary barrier against foreign matter entering the body. This section of skin prohibits the transdermal delivery of molecules that are larger than 500 daltons – a principal known as the 500 Dalton rule. HGH is a relatively large molecule made up of 191 amino acids and has a molecular weight of 22,124 daltons. As such, HGH (also known as somatropin) is about 44 times too big to penetrate through the skin barrier and enter the bloodstream. As the DEA puts it, “[t]he hGH molecule is too large for absorption across the lining of the oral mucosa… ”
But let’s just say, hypothetically, for the sake of argument, that Somaderm’s formulation allowed for the penetration of HGH (which it doesn’t actually contain) through the skin and into the bloodstream. If that were the case, then presumably other ingredients in Somaderm could also enter the bloodstream, like edetate disodium (EDTA), which is a significantly smaller molecule than HGH. EDTA is used as an intravenous drug to remove calcium and heavy metals, like lead or mercury, from the blood and its use can result in serious side effects, including death. In fact, the FDA issued a public health advisory for EDTA in 2015, stating that it was going “to determine if the benefits for its intended use continue to outweigh the serious risks.”
And there’s the rub. If one embraces the 500 Dalton rule, then Somaderm’s nonexistent HGH could not pass through the human skin barrier. If one rejects the science, then in addition to HGH (which doesn’t actually exist in the gel), EDTA would also be able to penetrate the skin and make it into the bloodstream, which would not be good.
When discussing the earnings of its distributors, an MLM may not make deceptive use of unusual earnings realized by only a few distributors without running afoul of the law. Likewise, a failure to disclose that the structure of a program ensures that the vast majority of consumers cannot achieve substantial income is deceptive under the law.
Considering this legal backdrop, it might surprise you (then again, it may not) to learn that New U Life does not publish* an actual distributor income disclosure statement that includes facts and figures regarding typical earnings, and the company and its distributors are making the following income claims without clear and conspicuous income disclosures:
To view TINA.org’s database of earnings claims about New U Life, click here.
*UPDATE 1/10/20: New U Life has published an income disclosure statement. The document, which shows distributors’ earnings for 2018, notes that about 96 percent of distributors made $600 or less that year, with “many” earning nothing.
In April 2018, New U Life prepared its Ucan Envision Success Training System. The goals sheet asks such probing questions as, “How much money would you like to earn per month? In other words what do you need right now?” When answering this question, prospective New U Life distributors should take into consideration the substantial costs of buying the company’s products. New distributors are encouraged to purchase the $900 Coach Lifestyle Pack to start their business and sign up for monthly autoship, which will cost at least $170 if one purchases Somaderm Gel (excluding shipping). As New U Life states, “your Autoship order is not required, but it is the most effective way to make sure you never miss out on commissions.”
The training system teaches you how to persuade your dad to become a customer. The pitch goes something like this:
Distributor: I just launched a New Business from Home, For the Sake of Setting up a College Fund for our three children who are soon about to Go to College, as YOU Know.
Distributor: We are in The Nutrition Business now, marketing the only FDA Registered OTC Transdermal Human Growth Hormone product available without a prescription. People all over the Country have been greatly benefiting from the product with the ways they feel, look, and function. So, Dad, we need your support. Would you please place an order now? I know you will love the product, and in the case you don’t, I will never bother you again. Which credit card would you like to use?
Poor dad! As for recruiting other distributors, the training teaches newbies to pique people’s interest and then leave it to more experienced distributors to close the deal. Suggestions for piquing interest include, “I found the only FDA Registered OTC Transdermal HGH product. I’ve been using it and I feel 20 again” and “Who do [you] know that is sharp and looking to make money and would love to feel 20 again?” The manual ends with this advice, “Work your business like a job and it will pay you like a business! Do it for you, it’s about time!”
In addition to the training manual, top New U Life distributors offer additional advice. Here’s one distributor’s advice regarding recruiting on Facebook:
Facebook – it’s our market. I think you guys should be jumping out of your skin tonight because if all you did was work Facebook and work you’re phone, you will be in a place a year from now that you’ve never dreamed. I don’t care if you think you’re just gonna make a thousand a month – you might want to add like a zero onto that. And I mean that. Because you don’t know the potential of what you have in here. We have something powerful on our hands that everyone wants; I’ve never seen something where people actually throw their credits cards at me. “Take my money.”
The distributor goes on to give some practical tips for engaging with possible recruits:
I want you to start adding to your friends list – really, really adding to your friend’s list – 10, 15, 20 people a day. . . . Two, I want you to start being the most friendly, outgoing encourager in the community of Facebook. Start telling people how much you miss them, or congratulations on your new car, your new house, your new baby, your new grandson. Sorry for the loss of your father. Start engaging with people. You can’t expect people to want to do business when you haven’t given a crap about their life in the last however many years you’ve been on Facebook. . . . You want to make this happen for you and your family, you gotta work it.
For a company that’s been around for less than two years, New U Life is definitely racking up its fair share of consumer complaints. The FDA has received at least 20 complaints about the company, which makes CEO Goldstein’s statement that there have been “no complaints to the FDA,” well, definitely not true as of today. Here’s a sampling. One of the first complaints to the FDA states:
Complainant believes the product is a scam and the website is misleading. . . . He has researched the product and believes the promoters and manufacturers are lying about the product. He indicates the company’s website is misleading and misrepresents their FDA status by promoting the NDC with their product “which gives it power.” Complainant believes the product is a scam because a 3-ounce (travel-sized) bottle sells for $169.99 and the results attributed to their product is impossible to attain.
The other FDA complaints have raised health issues experienced while using Somaderm, including rash, dizziness, weight gain, changes in menstrual pattern, elevated heart rate, severe headaches, insomnia and cancer. These complaints, at a minimum, call into question Goldstein’s statement that, “there hasn’t been any side-effects” with Somaderm.
As of February 2020, the FTC had received 151 complaints concerning New U Life. About 72 percent of the complaints seek a refund from the company and include horror stories of not being able to reach anyone at the company, being put on hold for hours at a time, and being told that their checks were in the mail when they weren’t. Relatedly, 37 percent of consumers complain about unauthorized charges, or not being able to cancel their auto-shipment – can you say possible ROSCA violation? Additionally, 38 percent of consumers warn that New U Life is a scam, fraud or pyramid scheme, and 13 percent complain about health issues surrounding Somaderm.
There’s no doubt that New U Life and its CEO have garnered the attention of the FDA and FTC. The FDA has already tested Somaderm and found it does not contain HGH or any drug for that matter. And just last week the FTC sent a closing letter to Natural Life Foods Corp, d/b/a Strike First Nutrition, which just happens to be owned by New U Life CEO Alexy Goldstein. According to the FTC, Strike First Nutrition was deceptively marketing a product called Testall Gel. Specifically, the FTC stated:
Among other claims, Testall Gel was marketed to strengthen bone density, prevent or reduce the risk of osteoporosis, balance blood sugar levels, reduce blood pressure, and prevent depression. It was also promoted as the only FDA-registered transdermal testosterone product available without a prescription.
Hmm. Where have we heard claims like that before? The FTC decided to close its investigation based in part on “the amount of sales [of Testall Gel] and the fact that your client has removed Testall Gel from the market.” The FTC ended its letter by stating, “The Commission reserves the right to take such further action as the public interest may require.”
New U Life has also been the focus of an Electronic Retailing Self-Regulation Program (ERSP) investigation. (ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus.) The investigation, prompted by an anonymous challenger, focused on the marketing of Somaderm Gel. In January 2019, ERSP determined that “the marketer (New U Life) did not adequately support claims that Somaderm Gel will confer health benefits.” The decision went on to explain that:
the marketer failed to submit any competent and reliable evidence to demonstrate that the Somaderm Gel formula and/or transdermal administration would provide the purported health benefits of HGH. Based upon the information provided, ERSP recommended that the marketer discontinue all performance and establishment claims. ERSP also noted that the marketer did not submit any information regarding the characterization of its product and ingredients as “homeopathic” in the advertising at issue. ERSP further advised the marketer that claims regarding whether the product or its ingredients are homeopathic should comply with applicable FDA guidelines.
And that wasn’t the end of the ERSP’s hammering of New U Life’s misleading marketing of Somaderm. It went on to state:
As to the claims that Somaderm Gel is FDA registered, ERSP determined that the marketer could make limited claims that were truthful and accurate. Specifically, the marketer could state that the marketer’s facilities are FDA registered and that Somaderm Gel has been assigned a National Drug Code (NDC) number. … [T]he marketer should not include any claims that state or imply that the Somaderm Gel product is FDA approved.
It appears that New U Life and its distributors have largely ignored the ERSP’s recommendations. The Direct Selling Self-Regulatory Council (DSSRC) alluded to New U Life’s broken promises to the ERSP in its own inquiry into the company’s health and income claims posted to its website in January 2020. The DSSRC identified “significant systemic compliance issues regarding [New U Life’s] ability to appropriately monitor the claims” at issue, but stopped short of referring the matter to the FTC, for now. It did not address the legal issues surrounding the sale of HGH or if Somaderm even contains human growth hormone.
If all that weren’t enough, there’s also the legal battle between George Najjar and New U Life, Goldstein and Goldstein doing business as Strike First Nutrition. Najjar brought a 13-count complaint in California state court in 2018 seeking, among other things, to be reinstated as the founder and CEO of New U Life. While the litigation rages on, the court issued the following preliminary injunction order against Goldstein, Strike First Nutrition and New U Life:
Alex Goldstein individually and doing business as Strike First Nutrition and New U Life, Inc., their officers, agents, servants, representatives, employees and all persons acting under, or in concert with them, are enjoined and restrained from the following acts, during the pendency of this lawsuit: (1) from selling, transferring, encumbering, conveying or otherwise disposing of any assets of New U Life; (2) from dissolving New U Life; and (3) from using any other entity, such as Strike First Nutrition, to sell New U Life’s HGH Gel and testosterone related products. (4) Defendants shall keep and maintain complete and accurate books and records of account and preserve all documents of New U Life transactions, including but not limited to, all emails to and from New U Life (including Plaintiff’s emails), sales, receipts, expenditures, etc.
In February 2019, New U Life and CEO Goldstein filed separate lawsuits against two former distributors for defamation, libel, and breach of contract seeking more than $100,000 in damages from each woman. A bold move for this fairly new company.
The first lawsuit was filed against former distributor Patti Sinclair for two comments she made on an MLM news website, behindmlm.com, in November 2018, including this statement:
I disagree about the network industry being about scamming people. I’ve met some of the most wonderful people in the world in the industry and I e [sic] also used some of the most remarkable products which are only offered through relationship marketing. With that said, companies such as NewULife absolutely ruin the reputation of the industry.
And the second lawsuit, filed just over a week later, was brought against Georgia Hargett for private Facebook messages sent to other distributors, including the following comments about New U Life and Goldstein, “The bottom line is they are crooks and manipulators. . . . we are speaking of a group of people who lie and are deceptive.”
Both lawsuits contend that the distributors breached the contract they executed with New U Life, which states, in part:
IMCs must not disparage, demean, or make negative remarks to third parties or other IMCs about New U Life, its owners, officers, directors, management, other New U Life IMCs, New U Life’s products, the Marketing and Compensation plan, or New U Life’s directors, officers and employees.
Both lawsuits are currently pending in California state court.
While New U Life has a four-plus star rating on the BBB website from 194 reviews as of August 24, 2019, it appears that the star rating is not entirely organic. More than 60 percent of the reviews for the company came in over a one-week period – March 19, 2019 to March 24, 2019 – and 52 percent of those ratings were submitted in just two days – Tuesday, March 19th (28 reviews) and Wednesday, March 20th (72 reviews). And guess what? All the reviewers (except one) for that entire week gave New U Life five stars. (The one exception gave the company four stars.) Not only that but these reviewers also made 42 health claims, like this one:
Another reviewer, who gave the company a one-star rating in June had a theory about why there were so many positive reviews:
As for New U Life’s A- rating, that appears to be based primarily on the length of time it has taken the company to respond to the 96 complaints it has received to date, which pretty much mirror the complaints filed with the FTC (see above). As for the facts that the company is promoting an HGH product (which isn’t permitted under FDA law) that doesn’t actually contain any HGH in it with inappropriate health claims; or that the company has failed to heed the recommendations of the ERSP (see above), which is under the auspices of the BBB – well, those issues, among others, haven’t seemed to factor into the BBB’s A- rating of the company.
TINA.org has reached out to New U Life for comment. Check back for updates.
4/8/20: TINA.org files a supplemental complaint with the FTC and FDA alerting both agencies to the fact that New U Life distributors are marketing the company’s Somaderm Gel as able to improve the immune system during the coronavirus pandemic and thus able to help treat and/or prevent COVID-19.
9/5/19: TINA.org files a complaint with the FTC and FDA against New U Life highlighting the inappropriate and deceptive marketing of Somaderm Gel, and urging both agencies to investigate the company and take prompt enforcement action.
Comparing the amount companies agree to pay to settle deceptive marketing charges with their annual revenue.
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