Markets Wired

The Federal Trade Commission today announced it has sent 10 letters warning multi-level marketing companies (MLMs) to remove and address claims that they or their participants are making about their products’ ability to treat or prevent coronavirus disease or about the earnings people who have recently lost income can make, or both.

According to the U.S. Food and Drug Administration (FDA), there currently are no products that are scientifically proven to treat or prevent the virus.

“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. “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.”

The letters highlight specific claims made by the companies or their distributors in social media posts and videos posted online, including:

• A video that includes the statement, “I can tell you that there’s thousands of people that are out of work right now. They’re all looking for a way to go earn money. This is a great stimulus package, because you get to teach somebody how to go earn $1,730 literally in their first 10 days in the business.”
• A social media post that said, “Got the coronavirus heebeegeebees? Boost your immunity with this amazing deal!!!!”

The FTC sent the letters to the companies listed below. The recipients are grouped based on the type of claims made.

Both Health and Earnings Claims:

Earnings Claims:

Health Claims:

The FTC has previously sent a number of warning letters about health claims related to the coronavirus pandemic, but this group of letters is the first to also include warnings related to claims about potential earnings related to the economic fallout from the pandemic.

In letters alleging unsubstantiated health claims, the FTC states that one or more of the efficacy claims made by the companies are unsubstantiated because they are not supported by scientific evidence, and therefore violate the FTC Act. In letters alleging unsubstantiated earnings claims, the FTC reminds the companies about what constitutes a false or misleading earnings claim that would violate the FTC Act.

The letters refer the companies to the agency’s guidance for MLMs, remind them that they are responsible for the claims made by their members and representatives, and advise the recipients that they and their members must immediately cease making all claims that would be false or misleading.

The letters instruct the recipients to notify the FTC within 48 hours about the specific actions they have taken to address the agency’s concerns.