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MLM 2020

FTC targets multi-level marketers for COVID-19 related claims

A recent batch of warning letters from the Federal Trade Commission, attorney Kevin Thompson said, send a clear message that multi-level marketers should not "commingle any product promotion or income opportunity with COVID."

In a recent batch of warning letters to 10 multi-level marketers (MLMs) of nutritional supplements, essential oils and other products, the Federal Trade Commission demanded companies remove claims that their products can treat or prevent coronavirus.

No products “are scientifically proven to treat or prevent the virus,” according to an April 24 FTC news release, citing the authority of another agency carefully monitoring claims: FDA.

Some of the warning letters also raised concerns over unsubstantiated earnings claims at a time when tens of millions of Americans have filed for unemployment and may be struggling to make ends meet.

“MLMs and other companies that distribute their products through networks of distributors are responsible for the product and earnings claims those distributors are making,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection, in the news release. “During this health and economic crisis, we are on the lookout for false income claims for work-at-home opportunities, in addition to spurious health claims that products can treat or prevent COVID-19.”

Recipients of the letters were given 48 hours to notify the government agency about the specific actions they have taken to address the agency’s concerns.

“The FTC's warning letters send a crystal clear signal to the network marketing community: Do not commingle any product promotion or income opportunity with COVID,” Kevin Thompson, a lawyer in Tennessee with Thompson Burton PLLC, said in an email. “Full stop.”

The agency’s letters, the MLM attorney added, “have been successful in kicking companies into high gear to monitor and police their salesforce more aggressively during the health care crisis.”

The FTC sent letters to doTERRA International LLC, Pruvit Ventures Inc., Total Life Changes LLC, Tranont, Modere Inc., Arbonne International LLC, IDLife LLC, It Works Marketing Inc., Rodan & Fields LLC and Zurvita Inc.

“Got the coronavirus heebeegeebees? Boost your immunity with this amazing deal!!!!” Pruvit Ventures, a marketer of a ketone supplement drink, was quoted as saying by its representatives or business participants.

The warning letter to Pruvit Ventures also flagged earnings claims, including the following: “For those of you working from home now, who says you ever have to go back? With a little education and a lot of uplifting support… you can take your health and your career future into your own hands.”

Pruvit Ventures, and several other MLMs that received an FTC warning letter, did not immediately respond to requests for comment.

In several letters, the FTC cautioned: “Express and implied earnings claims must be truthful and non-misleading to avoid being deceptive, which means that claims about the potential to achieve a wealthy lifestyle, career-level income or significant income are false or misleading if business opportunity participants generally do not achieve such results.”

Kevin Wilson, a spokesman for doTERRA, a marketer of essential oils in Pleasant Grove, Utah, and one of six companies to receive a letter over both health and earnings claims, said doTERRA responded to the FTC’s warning letter Monday, explaining how it has addressed the agency’s concerns and describing its “ongoing, extensive compliance efforts.”

The company “is steadfast in our efforts and resolve to comply with relevant laws and regulations and will continue to vigorously hold our salespersons in compliance with these laws,” Wilson said in an email.

In a statement on its website, another company targeted by the FTC for making health and earnings claims, Arbonne International—an Irvine, California-based marketer of skin care and nutrition products—reported it “is taking swift action related to this very serious matter.”

According to Arbonne International, content posted by its independent consultants failed to comply with FTC guidelines and did not align with its ethics code and policies and procedures.

“Arbonne upholds the highest standards of integrity and we do not condone deceptive, unethical or illegal posts, claims or practices—especially given the seriousness of the COVID-19 emergency,” the statement said.

The company explained it will immediately deregister the accounts of consultants responsible for the non-compliant posts flagged by FTC.

“Arbonne does not tolerate this or any practice that seeks to take advantage of the current COVID-19 pandemic or any other non-compliant activity,” the statement added.

Some of the companies targeted by the government are members of the Direct Selling Association (DSA), which divulged forwarding concerns raised by the FTC to its ethics code administrator and the Direct Selling Self-Regulatory Council (DSSSRC), an independent enforcement authority created by DSA in cooperation with the Better Business Bureau National Programs (BBBNP).

“Direct sellers have a special relationship with their customers and the wider community,” DSA President Joseph Mariano said in a statement. “And those relationships convey upon us a special opportunity and obligation to share only accurate information. DSA member companies have committed to doing what’s right for their customers, salespeople and communities in this time of crisis and consumer vulnerability, and I expect the companies who have been alerted to inappropriate or unhelpful claims will take prompt action to remedy those claims.”

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