Supplements Mixed With Direct Selling A Recipe Ripe For Cooking US FTC Regulation Violations
Doesn’t take long to find health and wellness product marketers on list of direct sellers or find firms offering those products in the FTC's history of enforcement actions in the sector.
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Direct seller pays fines in settlements with SEC and DoJ on bribery and other charges but two former executives for its operations in China still face criminal charges alleging violations of the Foreign Corrupt Practices Act. They have not been arrested and have remained at large since being charged in November 2019.
Firm says "we refuse to be bullied into a settlement" and FTC conflates legal MLMs with pyramid schemes by alleging every MLM paying incentives "for recruitment of participants” is a pyramid scheme. Separate firm supplying ingredient for brain health supplement agreed to settlement of FTC false ad complaint.
Similar to the National Advertising Division, the Direct Selling Self-Regulatory Council will provide a forum for competitive challenges in addition to routine monitoring of the direct-sales industry. Kelley Drye attorney John Villafranco predicts “greater self-regulatory focus on income misrepresentations and lavish lifestyle claims in the months ahead.”