FTC to MLMs: You Lie, You Pay
The agency puts the MLM industry on notice.
It was another successful year outing deceptive marketing on multiple fronts.
| Bonnie Patten
TINA.org has accomplished so much in just a few short years and in 2018 we continued to make great strides in addressing deceptive marketing on multiple fronts. Below is a summary highlighting our work in 2018. (Click each title to see more.)
This year, more than 100 companies, organizations, and individuals were the subject of TINA.org legal actions, with five complaints filed with the FTC; two complaints filed with state attorneys general; one complaint filed with state district attorneys; 42 notification letters sent to U.S. cancer centers regarding their deceptive use of patient testimonials; one warning letter to a prominent hip-hop producer and social media celebrity who took immediate corrective measures; one amicus brief opposing an unfair false advertising settlement; and one amicus brief filed in the U.S. Court of Appeals supporting New York and the Federal Trade Commission’s lawsuit against the maker of a popular — and deceptively marketed — brain supplement.
In addition to these actions, 2018 also brought about many changes as a result of TINA.org’s legal efforts. More than 1,000 deceptive social media marketing posts were either deleted or edited to include clear and conspicuous ad disclosures that were previously lacking; Gillette discontinued its deceptive Made in USA marketing campaign; the California Food, Drug, and Medical Device Task Force entered into a stipulated judgment with Gwyneth Paltrow’s wellness company Goop requiring it to pay $145,000 in civil penalties and refrain from making any claims about the efficacy or effects of any of its products without competent and reliable scientific evidence to substantiate its claims; and more than 100 deceptive cancer testimonials were removed from the internet.
Here is a roundup of TINA.org’s 2018 legal actions:
Top 10 ad alerts published in 2018 (based on page views):
The top two ad alerts published in 2018 are indicative of a trend in the deceptive marketing of brain supplements largely aimed at aging baby boomers. The response to our ad alert on Cognivex Clarity (also known as Cognivex Brain Booster and CortyX Clarity) was so strong that we added an update reflecting consumer complaints received post-publication regarding the ineffectiveness of the supplement(s) and difficulties canceling future shipments, among other things.
Products at the center of other ad alerts to crack the top 10 include a popular protein bar that does not give consumers a full picture of the ingredients on the front of packaging despite the words “No B.S.” on the label (RXBar); an essential oil diffuser whose lavender scent is a mixture of chemicals you might not expect from a product advertised as “100% natural essential oils” (Air Wick); and a pint of peanut butter cup ice cream devoid of peanut butter cups (Halo Top).
Outside the top 10 are ad alerts that sparked immediate changes by the marketer in 2018. These include an ad alert on a Kia President’s Day ad that misled consumers on the extent to which certain models are “made right here in America” and an ad alert on a delivery app aimed at military members called PICKUP that wasn’t being completely honest about the proportion of “trusted veterans” that comprises its workforce. (Deceptive ads targeting military members were a theme this year; see T-Mobile’s ONE Military Plan and Neurolumen.) Additional ad alerts to prompt the marketer into action in 2018 include articles on Wolverine, Clarks and Acure Organics.
Top non-legal action posts published in 2018 (based on page views):
The top two non-legal action posts published in 2018 highlight one of the hurdles to making any real money as a distributor with a multilevel marketing company or 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.: the requirement that distributors promote a product or become involved in a field that they may know next to nothing about. In the case of HempWorx, it’s cannabidiol or CBD, a cannabis derivative that’s illegal under federal law. With iMarketsLive, it’s foreign exchange or forex trading, which carries significant financial risks. In 2018, both these MLMs assured prospective distributors that they would be given the tools to become successful, no matter their experience level. And both made changes to their marketing in response to separate inquiries by TINA.org.
Over on the blog, popular posts penned by TINA.org staff include a reply to cancer centers that argue truthful testimonials cannot be deceptive and a reaction to a questionable ruling by the National Advertising Division involving editorial and sponsored content.
We tracked more than 400 federal class actions filed in 2018 (and continue to track more than 2,000 lawsuits altogether) alleging false advertising or deceptive marketing. Trending this year were new complaints alleging:
TINA.org maintained an active presence on social media in 2018, posting and interacting regularly with consumers on Twitter, Facebook and Instagram. We extended our advocacy efforts through various social media campaigns to alert consumers to Gillette’s deceptive made in the USA ads, misleading cancer testimonials, and undisclosed alcohol ads on Snapchat and Instagram. Social media also helped us expand the reach of ad alerts on everything from Air Wick’s essential oil claims to sketchy health claims made by a Dr. Oz “expert.”
In the spring, we launched an advocacy campaign on Twitter — #TNTruth — to expose and highlight how the MLM company Team National blatantly ignores FTC law and the DSA code of ethics by posting exaggerated income claims while the company’s income disclosure shows that, in 2017, 88 percent of its distributors made no income.
TINA.org continued to extend our outreach and educational efforts this year, presenting our work on false and deceptive advertising all around the country to audiences ranging from members of the MLM industry to advocates and state attorneys general. Highlights included the Direct Sellers Legal & Compliance Summit in Austin, Texas, where I spoke on misleading income claims and best practices directly to industry members. In February, I presented on deceptive brain claims at the Banbury Center’s meeting on “The Evolving Phenomenon of Direct to Consumer Neuroscience.” TINA.org’s investigation into alcohol marketing on Snapchat and other social media channels was the focus of our talk at the U.S. Alcohol Policy Alliance’s annual conference in Washington, D.C. We were back to Washington just a week later when I talked about deceptive social media marketing of alcohol, e-cigarettes, and cryptocurrency at the National Association of Attorneys General (NAAG) consumer protection conference. Our legal director, Laura Smith, rounded out the conference circuit with a presentation on various TINA.org legal complaints at the Hot Topics in Advertising & Marketing Law conference for the New York City Bar Association.
There are so many great ads out there and every Friday someone in the office picks one they like. My favorite for the year was this one because I have three kids and have endured my fair share of school assemblies.
With each passing year, TINA.org’s positive impact on advertising continues to grow. Our work and investigations in 2018 led to rapid and significant changes in numerous misleading marketing campaigns and the eradication of thousands of deceptive ads. Our organization is grateful for the consumers, academics, companies, synergy organizations, and governmental agencies that support our work and lend a hand in the fight against false advertising. It is our collaboration with these groups and individuals that results in our overwhelming success. We very much look forward to working with you in 2019 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.