The Federal Trade Commission has taken action against Financial Education Services and its owners, Parimal Naik, Michael Toloff, Christopher Toloff and Gerald Thompson, as well as a number of related companies. In response to a complaint filed by the FTC, a federal court has temporarily shut down the credit repair company. The FTC’s complaint alleges that the […]

Earlier this year, the Federal Trade Commission (FTC) announced an Advanced Notice of Proposed Rulemaking (ANPR) that signaled the Commission is interested in a new trade regulation rule on the use of earnings claims, and also expressed interest in addressing the use of lifestyle claims—like a new luxury car or being able to quit a […]

Following its lawsuit against AdvoCare in 2019, the Federal Trade Commission (FTC) is returning more than $149 million to AdvoCare distributors who reported losing money as a result of deceptive earnings claims. 

One of the most important features of a non-deceptive income claim is that it is supported by unbiased data. And in recent years, the FTC has repeatedly emphasized that representations about income opportunities should reflect the earnings of a typical distributor.

The FTC expressed interest in requiring companies to provide substantiated earnings claims without hyperbole or the use of hypothetical or past profits to consumers, and is considering whether lifestyle claims could be addressed in this rule as well.  

In a statement this week, the Direct Selling Association (DSA) expressed its continued support of the efforts made by the Federal Trade Commission (FTC) to stop false product claims connected to the COVID-19 virus. 

In these Notice of Penalty Offenses, the FTC highlighted the use of social media, which they believe has “blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace.”

The Direct Selling Self-Regulatory Council (DSSRC) of the BBB National Programs has referred Q Sciences to the Federal Trade Commission (FTC) and the Utah Attorney General’s Office for possible enforcement action. This referral comes after Q Sciences failed to adequately respond to the DSSRC’s concern about certain earnings and health-related product performance claims made by the company, which distributes and markets health-related and wellness products. 

In this environment, executives must proactively work with their company’s legal department to ensure their organization’s operative agreements, compensation plan, and compliance department have measures in place to minimize legal exposure.

Following the Supreme Court’s unanimous ruling that the FTC had been incorrectly wielding its power concerning Section 13(b) of the FTC Act, it appeared that the FTC’s power to inflict monetary damages without first subjecting themselves to the administrative processes found in Section 5 of the FTC Act would be limited.

The Supreme Court’s AMG Capital decision prevented the FTC from seeking monetary relief in court under Section 13(b). But the recent Neora decision confirms the FTC still has significant power under Section 13(b) that can be used to cause direct sellers a lot of pain in a court of law.

The Consumer Protection and Recovery Act passed 221-205, split almost entirely down party lines. Those in opposition to the bill expressed concern for “broad overreach” by the FTC and a need for statutory guardrails that would safeguard due process and protect legitimate businesses from being unfairly targeted or punished.