MLMs Need to be Included in FTC’s Business Opportunity Rule
TINA.org files comment in support of applying rule to direct selling industry.
Here's what we accomplished in 2021 with your help.
| Bonnie Patten
Despite another challenging year, with your help, TINA.org continued to make a difference. In addition to our work toward keeping ads honest, we also spent a great deal of time working on tasks that are not yet visible to the public. For example, we’ve been busy redesigning our website with new and improved features, which will launch soon. We’ve also been hard at work on long-term projects into various companies and industries that we hope to share with you in the coming months. Below is a summary of some of our accomplishments in 2021. (Click each title to see more.)
In 2021, TINA.org pursued more than a dozen legal actions that impacted hundreds of companies. These actions included complaints to federal, state and self-regulatory agencies; letters to companies; comments to federal regulators; amicus curiae briefs in federal court; and testimony at congressional hearings.
TINA.org notified the FTC of deceptive advertising by the world’s largest retailer (again), a global footwear company, a publishing giant that owns dozens of different entities, and a subscription-based fashion retailer that has millions of paying members worldwide (and which TINA.org also alerted California regulators about). TINA.org also provided information to the FTC about more than 660 multilevel marketing companies in an effort to push the commission to implement a penalty offense program targeting the direct selling industry, which the FTC did less than four months later. In addition, TINA.org filed complaints with state regulators and the Direct Selling Self-Regulatory Council (DSSRC) against two MLM companies, and sent a notification letter to one more, which took immediate corrective measures.
TINA.org also filed several amicus curiae briefs in a false advertising class-action lawsuit pending in a Florida federal court objecting to the terms of the proposed settlement as unfair to consumers, and a comment with the FTC regarding a proposed consent order reached in a case pertaining to the limits of the Restore Online Shoppers’ Confidence Act (ROSCA) supporting commission approval, which was ultimately obtained. Finally, TINA.org Executive Director Bonnie Patten testified before Congress on two separate occasions regarding ways to safeguard American consumers and fight fraud during the COVID-19 pandemic.
The year also brought about many changes as a result of TINA.org’s legal efforts. Hundreds of deceptive health and income claims were removed from publication across several MLM companies, dozens of influencers added appropriate disclosures to their hundreds of promotional social media posts, the DSSRC issued a case decision prompted by a TINA.org complaint, and hundreds of MLM companies may now be facing $43,792 in penalties per legal violation as a result of being put on notice of the law that applies to common marketing strategies used in the industry. Parties in a false advertising class-action lawsuit were ordered to file several rounds of supplemental briefing to address issues raised by TINA.org about the fairness of the proposed settlement, and ultimately amended their settlement in an attempt to address some of TINA.org’s concerns. (We are still awaiting a final court decision on the issues.) And in August, the Made in USA Labeling Rule the FTC proposed as a result of TINA.org’s petition for rulemaking went into effect.
Here’s a roundup of TINA.org’s 2021 legal actions:
The year’s top ad alerts based on page views ran the gamut from a shady website selling electronics to a line of deodorants deceptively marketed as “plant-based care” to a doctor who continues to make illegal disease-treatment claims despite the FTC telling him to stop.
Several ad alerts sparked marketing changes. These include alerts on Beyond Meat, Carote, DuThermx, Elite Metal Tools and Tomo. Tomo was one of two purported hangover remedies we wrote about in 2021, the other one being Goody’s hangover powder.
After we filed a complaint with the Direct Selling Self-Regulatory Council (DSSRC) regarding deceptive income claims used to market the Mary Kay business opportunity, the DSSRC conducted an inquiry and issued a case report. The article we published on our Mary Kay investigation was the most-read consumer news post of 2021. Here are the others (based on page views).
Also of note, after we filed a complaint with the FTC regarding Walmart’s continued use of deceptive made in the USA claims, the retailer quietly removed a link on its website to “Find American-Made Products on Walmart.com” that had led to nearly 2,000 “made in usa” listings. We also made several updates to our popular greenwashing post in 2021.
In addition, TINA.org published more than a dozen blogs in 2021. The most-read blog took a deep dive into a purported weight-loss program flooding Instagram called Sarah’s Discovery and was written by a TINA.org intern.
We tracked more than 450 federal class actions filed in 2021 alleging false advertising and/or deceptive marketing. Using this sampling, TINA.org’s CATrends feature highlighted new class-action trends involving baby foods, toddler formula, boxed macaroni and cheese, sunscreens, plastic water bottles, fake reference prices and hidden food delivery fees.
Also trending in 2021 were complaints alleging that:
TINA.org was sought out numerous times by journalists in 2021 to comment on and share expertise on advertising issues. Our work was highlighted in publications and news programs including NPR, The Washington Post, The New York Times, BBC Scotland, Glossy and others to speak on a broad range of issues ranging from greenwashing and clean beauty to subscription offers and MLMs gone wrong.
TINA.org’s social media channels remain an important vehicle not only to curate news and content related to false, deceptive and problematic advertising but also to share our advocacy efforts and connect with consumers around the world. For example, we used Twitter, Facebook and Instagram to alert consumers to Agora‘s use of dark patterns to entrap seniors, Mary Kay‘s unsubstantiated income claims to recruit distributors and deceptive made in the USA marketing by New Balance. Through social media, we also spread the word about dozens of #AdAlerts highlighting ads in the marketplace that should be viewed with caution. And because social media is a two-way street, we also received many tips and complaints from consumers on our social media platforms that became the subjects of several Ad Alerts.
2021 also saw TINA.org taking our outreach efforts to new levels. In January, we hosted a webinar with then-FTC Commissioner Rohit Chopra (now director of the CFPB) regarding the Supreme Court case AMG Capital Management LLC, et al. v. FTC and its impact on the agency. Then in February and again in April, TINA.org Executive Director Bonnie Patten was invited to testify before Congress in hearings focused on fighting fraud during the COVID-19 pandemic and on protecting the FTC’s ability to safeguard American consumers.
Several members of Congress solicited TINA.org’s expertise to weigh in and support proposed legislation that would help protect consumers. TINA.org endorsed a variety of bills including Rep. Cárdenas’s Consumer Protection and Recovery Act, Sen. Schatz’s Unsubscribe Act, Rep. Castor’s 21st Century FTC Act and Sen. Van Hollen’s Consumer OPT-IN Act.
As it says in our mission statement, “We recognize and appreciate that advertising serves an important role in our society – to introduce new products and services, to highlight competitive advantages and to enhance brand engagement.” As such, each week TINA.org staff select an ad they like. One of my favorites of 2021 was this one.
For your steadfast financial support, tips, engagement on social media, and expertise and collaboration with us, we are extremely grateful. Thank you! We look forward to working with you in 2022 toward keeping ads honest.
TINA.org files comment in support of applying rule to direct selling industry.
Trade organization campaign features deceptive income claims.
When it came to keeping ads honest in 2017, TINA.org was plenty busy.