TINA.org Urges FTC to Initiate Penalty-Offense Program Targeting MLM Industry

MADISON, CONN. June 30, 2021 – Ad watchdog truthinadvertising.org (TINA.org) sent a letter today to the Federal Trade Commission (FTC) urging it to initiate a penalty-offense program targeting the direct selling industry and its market-wide practice of utilizing deceptive earnings representations and false health claims.

For years TINA.org has taken an active role in holding the industry accountable by documenting thousands of examples of multilevel marketing companies using deceptive marketing to promote their business opportunity and sell their products and services. The advocacy group has also filed complaints against a number of companies violating the law including Vemma, Neora (formerly known as Nerium) and Herbalife, among others.

Despite these efforts as well as those of regulators at both the state and federal levels and a self-regulatory program instituted in 2019, nothing has stemmed the tide of deception within the industry. The coronavirus pandemic and resulting health and financial crisis has only exacerbated the use of inappropriate health and income claims by the direct selling industry. In fact, the FTC sent numerous warning letters aimed at industry members in both April and June 2020. In December, TINA.org conducted a follow-up investigation of the 16 companies that received notification from the FTC and found that the warning letters had little impact: the companies continued to make unsubstantiated health claims and/or deceptive income claims.

According to Bonnie Patten, TINA.org’s executive director, “This is why TINA.org is urging the agency to stop playing a game of whack-a-mole and instead implement an enforcement program that will finally deter the systemic harm caused by the constant and continual use of deceptive marketing within the industry.”

Under section 5(m)(1)(B) of the FTC Act, the commission may address market-wide harms by fining companies up to $43,792 per violation when they knowingly engage in a practice that has been ruled unlawful in a final cease and desist order following a fully adjudicated administrative proceeding. When it comes to the MLM industry and its deceptive marketing practices, there is no shortage of cases that clearly articulate these particular practices as unlawful. TINA.org has provided the FTC with a list of more than 660 direct selling companies operating in the U.S. together with available contact information so that the agency can formally apprise each company that deceptive health claims and atypical income representations are unlawful pursuant to prior final commission orders.

“The FTC needs to put the MLM industry on notice that its time for using deceptive marketing without facing substantial penalties is up,” Patten said.

To read more about TINA.org’s letter to the FTC, see: https://truthinadvertising.org/blog/tina-pushes-new-enforcement-tactic-against-mlm-industry/