FTC to MLMs: You Lie, You Pay
The agency puts the MLM industry on notice.
Here's what we accomplished in 2016 with your help.
| Bonnie Patten
TINA.org’s fourth year was incredibly successful on so many different fronts. Here’s a brief rundown of what we accomplished in 2016. (Click each title to explore.)
This year, TINA.org filed 11 new complaints with the FTC and state attorneys general concerning deceptive marketing practices, sent three additional warning letters to companies, and filed two oppositions to unfair false advertising settlements in federal court.
TINA.org also filed two briefs in the Fifth Circuit successfully urging the appellate court to affirm the lower court’s decision to allow a Racketeer Influenced and Corrupt Organizations Act (RICO) case comprised of alleged pyramid scheme victims to proceed as a class action. We also filed a United States Supreme Court brief urging the Supremes to review an 11th Circuit decision that approved a settlement agreement that was unfair to class members.
We also assisted multiple state and federal regulators with investigations into false and deceptive advertising campaigns, providing them with background information, data, and necessary evidence of malfeasance.
Finally, TINA.org sent notification letters to five major television networks notifying them of a deceptive advertising campaign by Prevagen airing on their channels in violation of their own policies as well as truth in advertising laws. Additionally, TINA.org sent notification letters to more than 55 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. companies informing them that they and/or their distributors are/were making inappropriate health claims.
So far, these 2016 actions have prompted state regulators to file two false advertising lawsuits, one of which – filed against My Pillow – resulted in the company paying over $1 million; caused the world’s foremost social media family – the Kardashian/Jenner clan – to clean up its act; successfully fought for the ability of pyramid scheme victims to bring RICO class-action lawsuits against companies; made the United States government correct its Made in the USA marketing of products sold to federal and state government agencies; caused a multimillion-dollar online lingerie company, Adore Me, to revamp its business structure and advertising campaign; and numerous other changes in ads and marketing campaigns across the country. Here is a round-up of TINA.org’s 2016 legal actions:
The number of readers contacting TINA.org this year more than doubled from last year. Their tips on questionable advertising led to at least 60 Ad Alerts out of the more than 130 we posted in 2016. Problematic advertising in the MLM industry and pricing issues topped the list of complaints sent in by readers. Credit card charges related to unwanted auto-shipments (known as negative-option offers) and problems with cable, TV and Internet advertising were also hot topics. In addition, readers also reported bait and switch issues with local auto dealerships.
The top ten Ad Alert posts for 2016 based on views were:
We kept our eye on companies we had previously investigated such as Walmart, whose deceptive Made in the USA claims continued to be a problem. We also continued our investigation of the e-cigarette industry, this time reviewing claims made by local vape shops. We expanded TINA’s List of MLMs that readers have asked us to investigate, adding more than two dozen companies readers tipped us to, and we updated our stories about several probes including the FTC pyramid case against Vemma and the agency’s settlement with Herbalife.
We tracked more than 400 class actions filed in 2016 (and continue to track hundreds more filed in previous years) alleging false advertising or deceptive marketing. Trending this year were complaints about:
Our Friday tradition of posting an ad that someone in the office liked continued with my personal favorite for 2016 being this totally inappropriate one celebrating Earth Day.
The press and media reached out to TINA.org on a regular basis in 2016 seeking our commentary and analysis of false and deceptive marketing practices. TINA.org was quoted and/or referenced in the New York Times, Washington Post, The Economist, CBS News, CBC, Buzzfeed, Fortune, Forbes, Bloomberg and Quartz, just to name a few. HBO’s Last Week Tonight with John Oliver also called on TINA.org for its expertise – we provided the show with information, videos, and social media postings for its segment on MLMs. So far, that segment has garnered over 6.6 million views.
TINA.org advised a Congress member about the status of online negative option offer laws and was asked to review draft legislation aimed at strengthening the Restore Online Shopping Confidence Act, known as ROSCA.
On the education front, TINA.org also presented our perspective and work on consumer protection at a legal education seminar as well as at an MLM industry conference. TINA.org also participated in an FTC webinar for National Consumer Protection Week.
In 2016, TINA.org did more than just eradicate deceptive marketing campaigns –TINA.org helped change industries. And while the impact of our work can be positively correlated to hundreds of millions of dollars in savings to consumers, our gratitude to those that helped contribute to our success is infinite. Thank you! We look forward to working with and for you in 2017.
The agency puts the MLM industry on notice.
Trade organization campaign features deceptive income claims.
When it came to keeping ads honest in 2017, TINA.org was plenty busy.