The FTC is not anti–direct selling. It’s pro–truth in advertising.

A recent opinion piece by the CEO of the national trade association for direct selling known as the Direct Selling Association (DSA) portrays the Federal Trade Commission as hostile to direct selling, guided by shifting legal standards, chastened by its loss in Neora and intent on suppressing entrepreneurship. That narrative, while rhetorically useful for the industry, is simply not true. What the FTC has challenged – consistently and across administrations – is not legitimate commerce, but business models sustained by false and deceptive earnings claims and compensation systems that reward recruitment over genuine consumer demand.

FTC legal standards have been consistent for decades

The DSA’s charge that the FTC’s standards are unpredictable is difficult to sustain. For decades, the agency has relied on two stable propositions: Participants in business opportunities must receive truthful information about likely earnings, and compensation structures cannot depend primarily on recruiting others into the opportunity. These principles have informed actions against DSA-member companies Forever Living, Neora, Herbalife and AdvoCare, and they have also been applied in other cases, including, but certainly not limited to, Walmart, Uber, Success By Health, iMarketsLive (IML), BINT and Financial Education Services – actions the DSA has never taken issue with.

In reality, it is not the law to which the DSA appears to object, but the commission’s scrutiny of its paying members. As a general matter, the association rarely, if ever, voices comparable concerns when the FTC brings actions against non-member multilevel marketing companies (MLMs) such as IML or Success By Health. Its selective criticism suggests the dispute is less about legal principles and more about who is being targeted.

What the DSA fails to acknowledge, however, is that the relevant deceptive practices the FTC is focused on transcend MLM membership status. Yesterday’s direct selling house parties and hotel ballroom pitches have largely migrated to Instagram reels, encrypted group chats, livestreams and TikTok testimonials offering freedom, luxury and income to all. When regulators address deception on social media platforms, they are not inventing novel standards or shifting the law; they are applying longstanding consumer-protection principles to the contemporary realities of the MLM industry.

The FTC’s record of success

The DSA’s tendency to describe Neora as a sweeping rebuke of the FTC, including in the recent opinion piece, is similarly overstated. Courts resolve individual cases on the evidence before them. A government loss in one matter at the trial court level does not erase decades of precedent, invalidate statutory authority or immunize an entire industry from scrutiny. In fact, in the last 47 years, the FTC has prevailed in 31 out of 32 cases in which it has alleged a pyramid scheme was masquerading as an MLM – three of those successes coming after the Neora decision. As the judge in the Neora case stated:

[I]n other cases, similar evidence presented by the FTC was found sufficient for it to prevail on the merits. Lest there be any doubt: the Court considered this to be a close case…

Clearly the Neora decision did not halt FTC enforcement. During and after that litigation, the FTC continued to prevail in pyramid scheme and deceptive income claim matters, including its case against Success By Health in which the Ninth Circuit Court of Appeals affirmed the pyramid scheme findings of the trial court. Outcomes such as this make clear that Neora was not a doctrinal turning point, but one case among many.

Herbalife and the meaning of consumer harm

The commission’s enforcement actions before and after Neora also reaffirm another longstanding principle: Consumer injury in the MLM context is measured by economic reality, not by industry narratives designed to minimize harm. The disconcerting assertion by the DSA that Herbalife caused no consumer harm because not all eligible distributors claimed redress misconceives both law and economics. Consumer injury is measured by the losses caused by deceptive practices, not by the subsequent redemption rate of a settlement fund.

In 2016, the FTC alleged that Herbalife’s compensation structure induced participants to purchase products, incur business expenses and devote labor in pursuit of an income opportunity that was materially misrepresented. Those sunk costs and opportunity costs constituted cognizable economic harm regardless of whether every affected consumer later obtained a refund.

Nor does an incomplete claims process negate underlying misconduct. Redress programs routinely experience under-participation for reasons unrelated to the merits of a case, including consumer transience, outdated contact information, documentation barriers or skepticism that reimbursement is worth the effort. Courts and agencies have long recognized that low refund rates are common in consumer matters and do not imply the absence of injury.

More fundamentally, the remedy in Herbalife extended beyond monetary payments. The company agreed to restructure its compensation system to tie rewards more closely to verifiable retail sales rather than internal consumption and recruitment-driven demand. Structural relief of this magnitude is imposed to correct marketplace distortions that have already produced harm. The relevant question, therefore, is not how many consumers later redeemed refunds, but whether participants were induced to make economic decisions on the basis of misleading incentives and representations. On that measure, the existence of consumer injury was undeniable.

FTC cases against IML and Forever Living show consistent legal standards

More recent FTC enforcement actions show a coherent and targeted focus on deceptive earnings claims. In its complaint against IML, the agency alleged that promoters marketed financial independence, luxury lifestyles and substantial income to young consumers and members of financially vulnerable communities while typical participants earned far less, if anything. The FTC described IML as “a wide-ranging investment training and business venture scam” that bilked consumers out of more than $1.2 billion.

The agency’s most recent action against DSA-member company Forever Living bears striking similarities to IML. Forever Living engaged in the same pattern and practice of widespread deception as IML – using thousands of false and misleading earnings claims to lure consumers into a business opportunity in which the majority of distributors made nothing or lost money. The FTC’s complaint against Forever Living also alleges that company executives knew they were likely violating the law with the presentation of giant checks to successful distributors but chose to continue the practice because “[t]his is one of the biggest motivators we have … the [distributors] love this.” Far from reflecting shifting FTC standards, the action against Forever Living demonstrates continuity: Whether the target audience is young recruits or consumers drawn to legacy MLM branding, the legal standard is the same – income claims must be truthful and representative of what the typical distributor can likely achieve.

That legal continuity is precisely why the DSA’s claim that Forever Living discontinued its MLM model in the United States because of “unpredictable, ever-shifting” FTC standards misses the mark completely. Forever Living changed course only after being confronted by the FTC with allegations that it had long violated settled legal principles prohibiting deceptive earnings claims. A company’s inability or unwillingness to continue operating once required to follow the law and make truthful, substantiated representations does not demonstrate regulatory uncertainty. It demonstrates that the prior model depended on practices that could not withstand consumer-protection scrutiny. If enforcement against deceptive claims makes a business model unsustainable, the problem lies not with the legal standard, but with the model itself.

The failure of direct selling self-regulation

The inability of the DSA’s self-regulatory body, the Direct Selling Self-Regulatory Council (DSSRC), to rein in the deceptive marketing of companies like IML and Forever Living is instructive. For years, while thousands of false and misleading earnings claims promoting these MLMs circulated across the internet, the DSSRC did little to nothing to address the misconduct. Its limited interventions – typically the removal of a dozen or so isolated social media posts — never confronted the underlying systemic problem presented by these companies: all-encompassing marketing schemes built on misleading representations that ordinary participants could achieve financial success. Indeed, the DSSRC’s apparent ignorance concerning Forever Living’s years-long deceptive marketing tactics led the council to state in 2024 that it “recognized the Company’s good faith efforts and ongoing commitment to regulatory compliance.” This statement is emblematic of DSSRC’s inability to recognize and stop deception in the MLM industry and underscores its recurrent failings.

For years, the DSA has promoted the DSSRC as proof that the industry can police itself, yet deceptive earnings claims have continued largely unabated. The gap between rhetoric and reality is striking: DSA and its member companies invoke their code of ethics and policing by the DSSRC while misleading earnings promises continue to flourish. The council simply is not equipped or structured to keep pace with decentralized, social media-driven marketing in the fast-moving digital environments of the MLM industry. Each successive year of the DSSRC’s existence only makes it more clear that rather than producing any fundamental change, the council is simply being used by the DSA to serve as a shield against stronger public enforcement.

The real threat to entrepreneurship

The real threat to entrepreneurship is not FTC enforcement. It is a marketplace in which business opportunities are advertised through unrealistic promotions, selective success stories and opaque odds of success that prevent consumers from making informed choices. When prospective participants are told they can achieve financial freedom, replace full-time income, or even earn a few extra dollars without clear disclosure that most participants earn little money or nothing, the market ceases to reward innovation, efficiency or genuine consumer demand. Instead, it rewards those most willing to exaggerate outcomes and obscure risk. That dynamic harms aspiring entrepreneurs who invest time and money based on distorted information, and it undermines confidence in legitimate small-business opportunities more broadly. Effective enforcement by the FTC levels the playing field by ensuring that firms succeed because they offer real value, not because they lie.

Accountability, not persecution

The FTC’s role is neither to favor nor punish any particular industry; it is not tasked with preserving one either. The agency’s job is to protect consumers and preserve fair competition. Requiring truthful earnings claims and compensation grounded in actual consumer demand is not bias. It is the minimum condition of a fair market.

The DSA would do well to abandon narratives of persecution and instead confront the persistent practices that continue to invite regulatory scrutiny to the MLM industry: deceptive income promises, recruitment-driven incentives and internal oversight systems that too often prove symbolic rather than effective. Until these problems are meaningfully addressed, criticism of the FTC will remain less a defense of purported entrepreneurship than an evasion of accountability.