FTC to MLMs: You Lie, You Pay
The agency puts the MLM industry on notice.
Looking back at 2020.
| Bonnie Patten
Despite the challenging times, TINA.org accomplished a great deal in 2020. Our team didn’t miss a beat as we transitioned to working from home in March, and quickly focused on dishonest companies seeking to take advantage of consumers during the pandemic. Our work made a difference and for that, we are grateful. Below is a summary of our accomplishments in 2020. (Click each title to see more.)
This year, TINA.org pursued more than 30 legal actions, including complaints to federal, state and self-regulatory agencies; warning letters to companies; comments to federal regulators; and amicus curiae briefs.
TINA.org notified the FTC of 20 companies engaged in false or deceptive advertising, two of which were also the subject of TINA.org complaints to the FDA. We also filed complaints with state district attorneys against two other companies and complaints with the Direct Selling Self-Regulatory Council (DSSRC) against three MLM companies, and sent warning letters to two companies, both of which took immediate corrective measures. Of these 26 MLM companies, 16 of them were also making unsubstantiated COVID-related claims, either that their products could cure, prevent or kill the disease or that their business opportunities could provide a lucrative income during the pandemic’s economic turmoil, or both.
As a result of our legal efforts, TINA.org was able to stop several false and deceptive marketing campaigns in 2020: MLM Market America removed more than 750 deceptive income claims from publication; Everest Microbial Defense stopped making unsubstantiated claims that its hand sanitizer could kill the COVID-19 virus; the DSSRC issued five decisions based on TINA.org complaints resulting in hundreds of deceptive health and income claims being removed from the internet; music icon Rihanna’s online lingerie company Savage x Fenty made changes to its website to make its pricing and negative-option offer terms more clear; and Gwyneth Paltrow’s Goop removed deceptive claims that certain of its products have a therapeutic effect on several medical conditions. In July, the FTC acted on TINA.org’s petition and proposed a made in the USA labeling rule that would allow the agency to seek civil penalties against first-time offenders.
In addition, TINA.org filed three amicus curiae briefs with three different courts this year: one in the U.S. Supreme Court in support of the FTC’s use of Section 13(b) of the FTC Act to obtain money unlawfully taken from consumers; one in the California Supreme Court (along with other consumer advocacy groups) in opposition to Sony’s use of a California statute to shield itself from liability for deceptively advertising that a posthumous Michael Jackson album contained nine new songs by the King of Pop when, in reality, three of them were sung by a copycat; and one in federal district court objecting to an unfair settlement agreement reached in a class action filed against the makers of Prevagen, a brain supplement.
TINA.org also filed three comments with federal regulators on ways they can improve consumer protection regulations – two with the FTC concerning made in the USA advertising and social medial influencer marketing, and one with the SEC concerning investment advisor marketing.
Here’s a roundup of TINA.org’s 2020 legal actions:
In addition to these actions, TINA.org submitted one complaint to the DSSRC that has not yet resulted in a public decision and thus has not been publicized by TINA.org, pursuant to the DSSRC’s request.
Top 10 ad alerts published in 2020 (based on page views):
Nos. 1 and 8 are ad alert success stories in that they prompted changes to the company’s marketing. They weren’t the only ones. See our 2020 ad alerts on RiduZone, Pottery Barn Kids, Jacksonville Mom and BodyArmor, The Perfect Part, Lifetrients (formerly known as NourishLife), Kyäni distributor’s Facebook Live video, “FDA Approved Supplements” and B17.
TINA.org also took on Big Tech in 2020, publishing articles on how Amazon promotes and profits from deceptively marketing brain supplements and on how advertisers kept running ads on Facebook and Facebook-owned Instagram despite making public statements that they were boycotting the platforms.
TINA.org also published more than a dozen blogs in 2020. The most-read blog concerned deceptive income claims in the MLM industry and advised how not to market your MLM business.
Also trending this year were complaints alleging that:
In addition, we reported on more than 400 class-action lawsuits related to the pandemic. Issues raised in these complaints include false advertising, failure to provide refunds, securities violations and privacy issues, among other things.
In addition, TINA.org staff presented our work at numerous conferences and meetings this year. Bonnie spoke to the payment processing industry at both the Merchant Acquirers’ Committee’s Level Up Conference in the spring, as well as at the Virtual RiskConnect Meeting in November. Bonnie was also a panelist at BBB National Program’s NAD 2020 Annual Meeting in the fall. Laura Smith, TINA.org’s legal director, detailed TINA.org’s investigation into deceptive marketing by cancer treatment centers at the ASCO (American Society of Clinical Oncology) Annual Meeting in the summer. Bonnie also published a law review essay in the Administrative Law Review titled, “A Multilevel Marketing Company’s Battle to Survive an FTC Pyramid Scheme Action.”
This year, more than ever, we are extremely grateful to all who contributed to TINA.org – supporting us financially, engaging with us on social media, sending in consumer tips, collaborating on projects and providing us with expertise. Thank you! We look forward to working with you in 2021 to keep ads honest.
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.