Watchdog group alerts FTC to COVID-19 claims being made by MLM

By Hank Schultz contact

- Last updated on GMT

©Getty Images - serggn
©Getty Images - serggn

Related tags: mushrooms, reishi, COVID-19 claims

An industry watchdog group flagged coronavirus treatment claims being made by a multilevel marketing company and has referred the matter to the Federal Trade Commission.

The Direct Selling Self-Regulatory Council (DSSRC), a division of BBB National Programs (which also operates the National Advertising Division) initiated a case involving an MLM called Gano Excel.  The company, which is based in Chino, CA, was originally founded in 1995 based on the cultivation and marketing of Ganoderma lucidum​, commonly known as the Reishi mushroom.  

Gano Excel markets a number of different dietary supplement, functional coffee and personal care products based on Reishi as well as other fungal ingredients.  The products are manufactured in Malaysia and are marketed via network marketing affiliates in a number of countries including the United States.

COVID-19 treatment claims

In a statement issued this morning, DSSRC said that it had flagged a number of coronavirus treatment claims being made on the products by sales associates as well as inflated earnings claims.  The matter has been referred to the Federal Trade Commission for possible enforcement.

 Among the claims DSSRC said being used on social media platforms were:

  • “Help boost your immune systems especially now with this Coronavirus it will help your body to fight this virus.”
  • “Boost the immune system, detoxifies the body from toxins and reduces the risk of hypertension, diabetes and cancer.”
  • And a Youtube video titled “I HAVE THE BEST SOLUTION FOR CORONA VIRUS” – “HEALTHY IMMUNE SYSTEM WINS IN A TIME WHEN A VIRUS IS SPREADING OUT OF CONTROL  - A HEALTHY DIET INCLUDES SUPER FOODS SUCH AS REISHI MUSHROOM A.K.A ‘GANODERMA.”

Faulty earnings claims

In addition to policing product claims, DSSRC also has the mission of making sure the earnings claims made by MLMs are compliant with federal guidance, which would apply to MLMs marking all kinds of products and services. In mid 2020 DSSRC put out a guidance​ in conjunction with the direct selling industry to help companies avoid making inflated earnings claims.  These kinds of claims formed part of an FTC complaint against industry giant Herbalife, which the company settled by paying a $200 million fine and agreeing to changes its business practices​.

In the case of Gano Excel, the DSSRC statement said among the deceptive claims being circulated by Gano Excel were:

  • “Are you ready to own your own business? Do you want to make $1,000.00 to $20,000.00 extra a month passive income?”
  • A video titled “WHO NEEDS SOME MONEY?” ​included the claim “Let’s Help People All Over the U.S. abroad Earn and Become Healthier…If You Know 2 people Who Love Coffee and Tea Or Know Someone Who Wants to Make An extra $500-$50,000 a Month.”

The DSSRC statement said the matter had been referred on to FTC because Gano Excel did not provide assurances that the non compliant claims would be removed from its social media platforms.  In addition, the company offered no documentation to prove that practices had been altered to avoid such claims in the future, according to DSSRC.  The referral of  case on to FTC in the event of an unsatisfactory conclusion mirrors the process followed in NAD proceedings concerning advertising claims.

Gano Excel did not respond to a request for comment for this article.

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