When then FTC Chairwoman Edith Ramirez took the stage at the Direct Selling Association’s Business & Policy Conference in Washington, D.C. in October 2016, she did not mince words
when it came to the widespread use of inappropriate earnings claims as a means of recruitment in the MLM industry.
[M]ulti-level marketers should stop presenting business opportunities as a way for individuals to quit their jobs, earn thousands of dollars a month, make career-level income, or get rich because in reality, very few participants are likely to do that. Although it may be true that a very small percentage of participants do have success of this type, testimonials from these rare individuals are likely to be misleading because participants generally do not realize similar incomes.
More than a year later, it appears few if any of the DSA members in attendance that day took the warning to heart.
A TINA.org investigation found more than 97 percent of DSA member companies are (or have been) engaged in misleading marketing schemes that peddle false and unsubstantiated earnings claims trying to convince prospective distributors to join their MLM network. TINA.org’s probe examined the marketing of every DSA member company as of November 29, 2017
and found that 137 out of 140 misrepresented the amount of money participants are likely to earn — misrepresentations that cause real and substantial harm to consumers.
TINA.org’s findings not only constitute violations of FTC law, they also breach the DSA’s own Code of Ethics
and in doing so contradict DSA President Joe Mariano’s public statements
on the supposed higher standards of the code:
DSA enforces one of the most rigorous self-regulatory codes of ethics in business today, ensuring that direct selling companies not only follow the law, but in many cases exceed its requirements.
“All too often, consumers with limited capital are induced to part with their money by MLM promises of unlimited wealth that will never come to fruition,” said TINA.org’s Executive Director Bonnie Patten. “It’s time that the DSA and its membership were held accountable for these unsubstantiated income claims.”
Using the November 29, 2017 DSA membership list, TINA.org investigated every company on the roster and found that out of 140 member companies (which includes divisions of certain companies), 137 are making or have made misleading income representations. TINA.org has amassed more than 3,000 examples of companies and/or their distributors making inappropriate earnings claims on their websites and social media platforms. This, despite the fact that Mariano
informed TINA.org just last year that:
Beginning in 2017, 100 percent of DSA member companies will undergo a mandatory ethics review to ensure compliance with our Code of Ethics, including in the areas of income and product claims.
The claims that TINA.org has compiled range from assurances of achieving financial freedom, to making unlimited income, to being able to quit your job and stay home with your children. And these income representations are not hard to find. For the majority of companies, one need look no further than their websites and social media pages. Other assertions of wealth can be found simply by googling the name of an MLM company and “millionaire,” or “financial freedom,” or “free car,” resulting in a plethora of websites and social media posts making false and deceptive claims. Such was the strategy that led to a number of TINA.org’s findings.
While most of the MLM databases
on TINA.org contain a sampling of around 20 inappropriate income claims, four companies (Kyani, Nerium International, Reliv International
, and Team National
) have more than 100, Jeunesse Global
has more than 80, and 25 companies have less than 10 (Aerus, Become International, Boisset Collection, Carico International, Compelling Creations, Dudley Beauty, Energetix, Flavon USA, Harmony Green America, HTE USA, John Amico Haircare Products, The Kirby Company, New Earth, Orenda International, RBC Life, Regal Ware, Rena Ware International, Rexair, Sanki Global, SAS Spurilla, Simply Said, SimplyFun, Tealightful, Tristar Enterprises and Zinzino
). TINA.org did not find inappropriate income claims for three companies: Red Rock Traditions, WBC Group
(which is affiliated with Origami Owl
), and World Book.