New FTC warning letters cite unsupported Coronavirus-related health and earnings claims

The FTC is not the pen pal you want if you operate a multi-level marketing company but aren’t closely monitoring your distributors.

In its latest round of warning letters, the FTC warns ten MLM companies that they are responsible for the claims made by their participants. The letters direct the companies to report within 48 hours what actions they’ve taken to stop their distributors from claiming their products can treat or prevent Coronavirus disease, that MLM business opportunity participants are likely to earn substantial income, or both.

The FTC says that the health and earnings claims are unsubstantiated and therefore violate truth-in-advertising laws. The products at issue are not scientifically proven to treat or prevent COVID-19, the disease that Coronavirus causes.

The FTC previously has sent warning letters to companies about their Coronavirus-related health claims, but the new letters are the first to also target claims about potential business opportunity earnings. The letters come at a time when millions of people are out of work and facing financial challenges as a result of the pandemic.

MLM companies rely on a network of independent distributors, sometimes called business opportunity participants, to buy and resell their products, often through direct person-to-person sales or online. MLMs typically offer participants a cut of the sales made by people the participant recruits to invest in the business opportunity. The new recruits then try to sell the products, and try to recruit more people to do the same. Most people who join MLMs make little or no money.

According to the FTC, distributors of the MLM companies receiving the letters have posted promotional messages on Facebook, Instagram, and other social media sites.

Health claims the FTC letters cite include:

• “STAY SAFE!! MAKE YOUR IMMUNE SYSTEM STRONG!!!” Standard coronavirus protection kit . #antiseptics and #immunity_support.”
• “HOW WILL YOU FIGHT OFF CORONA? USE NUTRABURST-CHAGA- …. #coronacure #coronaprevention … #immunesupport #immunebooster … #immunesystembooster”
• “Got the coronavirus heebeegeebees? Boost your immunity with this amazing deal!!!!”
• “… If interested to learn more or obtain oils or rollers Let me know A little extra protection can help #doterra #NursesCOVID19 #Dialysis #ImmunityBoosters #ImproveRespiratoryFunction”

Earnings claims the FTC letters cite include:

• “…Living in quarantine and where 14 million people applied for unemployment just last week … I’ll stick with the opportunity to change people’s lives … turn a small investment into six figures …. #arbonne … #quarantine #2020”
• “Need to make extra money? Find it difficult to pay your bills? Were you laid off/ #fired? Be your own Boss w/doTERRA essential oils. Msg me to achieve financial independence #laidoff #unemployed #cantpaymybills #cantpaymyrent #student #sales #sidehustle #makemoney #stayathomemom.”
• “[E]veryone’s getting stimulus checks right now… There is no better investment you could do… Take that money that you’re about to get back… figure out a way to make this happen tonight.”

In the letters alleging unsubstantiated health claims, FTC staff reminds the companies that, under the FTC Act, claims that a product can prevent, treat, or cure a serious disease require the support of well-controlled human clinical studies. Because “no such study is currently known to exist” for the advertised products, the FTC says the companies “must immediately cease making all such claims.”

In the letters alleging deceptive earnings claims, FTC staff reminds the companies that under the FTC Act, “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. Even truthful testimonials from participants who do earn significant income or more will likely be misleading unless the advertising also makes clear the amount earned or lost by most participants.” The deceptive claims also must immediately stop, the FTC says.

FTC staff sent the letters to: (1) Arbonne International, LLC, (2) doTERRA International, LLC, (3) IDLife, LLC, (4) It Works Marketing, Inc., (5) Modere, Inc., (6) Pruvit Ventures, Inc., (7) Rodan & Fields, LLC, (8) Total Life Changes, LLC, (9) Tranont, and (10) Zurvita, Inc.

For members of the MLM industry, the letters clearly lay out the takeaway message: “You are responsible for the claims of your business opportunity participants and representatives.”