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MLM Distributors Cited in FTC Lawsuits

Webinars are “fair game” for enforcement

MLM Distributors Cited in FTC Lawsuits

Warning Letter Wednesday primarily focuses on FDA-related enforcement, but occasionally I review interesting FTC actions. Today's #WarningLetterWednesday highlights three FTC cases against distributors of doTerra essential oils and supplements. doTerra is a network marketing company.

This differs from last year's Young Living FDA warning letter, where the MLM parent company received the letter for claims largely made by its distributors (affiliates). Read more about this letter here

The claims in these three complaints were made in webinars in early 2022. FTC states they are "former healthcare practitioners who touted their expertise in recommending the products."

Interestingly, FTC points out that the distributors named in these lawsuits use their medical background to market supplements. I'm sometimes asked if doctors can make statements about supplements they sell that non-doctors can't make. The answer is, of course, no, but in these cases, the distributor's medical background seems to be mentioned as another way they potentially misled consumers.

Some of the cited claims imply products can support the immune system, and they dance around the idea they can protect or help with COVID. Since COVID claims are very high risk, even lightly implying protection is enough to attract agency action like a warning letter, administrative complaint, or lawsuit. Here is one example.

From Lauren Busch FTC lawsuit. "LLV should be part of your daily routine, DDR Prime should be a nonnegotiable, especially with all the exposures we have in this world beyond just what's going on with COVID."

A key takeaway is that all secondary marketing will be heavily scrutinized if any COVID claims are present.

doTerra, the parent company from today's Warning Letter Wednesday, seems to do a good job at compliance. I ran my Apex Compliance program on their website and found just a few concerns. I'm happy to run a sample keyword check on your website; just let me know.

The FTC complaint includes a permanent injunction against each defendant, stopping them from making unsubstantiated claims and also pay a $15,000 fine each. In my opinion, this monetary amount seems low, but it does send a cautionary tale that MLM distributors can be liable for the claims they make. COVID claims are likely why these distributors were targeted.

"Brain fog" is also cited in one of the complaints. Do you consider this to be a disease claim? According to HHS, brain fog can be a symptom of long-haul COVID, a recognized disability under the Americans for Disabilities Act (ADA). My take is brain fog related to COVID symptoms is undoubtedly a disease claim, but brain fog not related to Covid isn't high risk. I feel "occasional brain fog" from time to time.

I write about brain fog claims here

From FTC complaints: "The webinar was organized and promoted by doTERRA distributors …. and the registration link for the webinar was distributed on publicly accessible social media accounts."

Interestingly, FTC references that access to the webinar is publicly available. If the webinar was closed to the public or invite-only, do you think it would have been cited in this complaint? Also, it seems the webinar recording may have been posted on YouTube, which, if true, maybe how the FTC found it. Companies and company representatives frequently record webinars and podcasts. Claims enforcement made in these formats are rare unless they are posted on YouTube, or the transcripts are hosted on a commercial website. My SaaS Apex Compliance program scans YouTube videos as well as websites and documents for risky keywords. Learn more here

Citing research is also mentioned in one of the complaints.

From FTC lawsuit "slide displayed the abstract from an article titled "Computational evaluation of major components from plant essential oils as potent inhibitors of SARS-CoV-2 spike protein."

We have previously discussed how citing COVID research to sell products can lead to warning letters. 

Read my comments on last year's FTC's 4.2 million dollar fine against Fashion Nova for allegedly hiding unfavorable product reviews here.

Read about the FTC action here

Disclaimer: The educational information provided here is for informational purposes only. Contact an attorney for specific legal advice. Rule #1 in compliance is to ensure marketing is truthful and not misleading.

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