FTC warns multilevel marketing company sellers about coronavirus health and earnings claims
- The FTC has sent warning letters to ten multilevel marketing companies because of claims distributors are making about their products' ability to treat or prevent coronavirus, or about the earnings people can make if they've recently lost income.
- The FTC's letter to essential oils company doTerra, for instance, outlined examples such as a photo of doTerra-branded essential oils bottles accompanied by the hashtags "#covid" and "#prevention."
The FTC sent warning letters to ten multilevel marketing companies because of claims they or their sellers are making about their products' ability to treat or prevent coronavirus, or about the money people can earn if they've recently lost income.
The FTC sent letters to Arbonne International, doTerra, Modere, Pruvit Ventures and Total Life Changes, each of which sell essential oils, supplements or related products, covering both health claims and income claims. It also warned supplements company IDLife, weight loss and nutrition product company It Works Marketing, and skincare product company Rodan & Fields about earnings claims, and wellness product company Zurvita just about health claims.
Multilevel marketing companies typically work with non-salaried "representatives" that sell products directly to consumers, often earning commissions for their sales and the sales of those they recruit for their "downline." Many such companies have been criticized for making questionable health claims about their products in the
The coronavirus pandemic has provided a new avenue for many sellers to make unproven claims about their products. Sellers for companies, including doTerra and Young Living, were claiming on Facebook that their products can prevent consumers from getting coronavirus, and some suggested the products can give consumers an immunity boost needed to ward off the coronavirus.
The claims about their earnings potential could also find a newly receptive audience, as coronavirus-induced business closures throughout the U.S. have driven up the number of Americans applying for state unemployment benefits. Two weeks ago, new jobless claims totaled 4.427 million, the Labor Department reported Thursday.
The FTC noted in a press release that according to the Food and Drug Administration there are currently no products scientifically proven to treat or prevent the virus. The FTC's director of the Bureau of Consumer Protection said the organization is on the lookout for false income claims for work-at-home opportunities.
The FTC's letter to doTerra, for instance, outlined examples such as a photo of doTerra-branded essential oils bottles accompanied by the hashtags "#covid" and "#prevention."
One doTerra seller also posted of the earnings potential: "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."
The FTC's letter to doTerra letter noted that it's unlawful to advertise a product can prevent, treat or cure a disease unless you have "competent and reliable" scientific evidence and that sellers must cease making all such claims.
It also said earnings claims, both express and implied, must be truthful and non-misleading.
"...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," the letter reads.
The letters reflected different ways distributors are using that angle to bring in new recruits. One example the FTC included to its letter to Rodan and Fields said: "During an uncertain time like this, one thing I am grateful for is residual income from my home based business. If you're struggling, and could use an extra few hundred dollars a month, why not give this a try…. #residualincome."
CNBC reported earlier this month that multilevel marketing company distributors from companies including Arbonne were asking for cash donations so they can buy their own supplies to give to first responders, doctors and nurses and others on the front lines of the COVID-19 pandemic. Experts said this is a marketing ploy to improve sales volume and that consumers' donation money is better spent directly donating to hospitals or other reputable organizations.
In an emailed statement, Rodan and Fields said it has "strict policies concerning earnings and product claims and does not tolerate non-compliant or misleading income claims, and [routinely initiates] enforcement action against such claims." The company said it educates its 300,000 independent consultants about the importance of complying with product and income claims and has a team to identify and correct non-compliant claims.
doTerra said in a statement it received a letter from the FTC last week and responded Monday by detailing how it has addressed the agency's concerns and "outlining [its] ongoing, extensive compliance efforts." Arbonne said consultants responsible for the posts identified by the FTC as non-compliant will have their accounts de-registered.
The other companies did not immediately respond to emails or phone calls for comment.