MLM's over the top earnings claims sent to FTC for possible enforcement

By Hank Schultz contact

- Last updated on GMT

©Getty Images - Muratdeniz
©Getty Images - Muratdeniz

Related tags: Dietary supplements industry, Dietary supplement companies, Medical devices

A multilevel marketing company’s earnings claims have been referred to the US Federal Trade Commission after the firm allegedly failed to respond to a self regulation inquiry.

The firm, which does business as Vyvo, Inc., lists corporate locations in both Santa Clara, CA as well as Dublin, Ireland.  The company sells a variety of wearable devices as well as dietary supplements.

According to a decision registered by the Direct Selling Self Regulatory Council, a program run by BBB National Programs, the company was making a number of non compliant earnings claims associated with its business opportunity.  Like other such advertising programs administered by the organization, if a company fails to respond the complaint is forwarded on to the relevant federal agency, either FDA or FTC, for possible enforcement action.

Claims for ‘career-level’ income

Vyvo does prominently list FDA-type disclaimers on its products page, saying that neither the medical devices nor the supplements are intended to diagnose, treat, prevent or cure any illness.  The company goes on to state that, “VYVO does not make any claim that its products prevent or cure COVID-19 or the coronavirus, and any claims that they do are a violation of our Company policies and are prohibited.”​ This seems to be an attempt to distance itself from any exorbitant claims made by distributors on their own account, which is a risk for all MLMs active in the space.

However, Vyvo continued to feature non compliant earnings claims, according to the DSSRC action. They included:

“Tired of the 9 to 5 grind? Tired of sitting in traffic every morning at 8am? Tired of your boss??? Dm me now /WhatsApp:+1(312-270-1273) to link up with ($1,800) in 3 days for more details on how to build a residual income!!!!“

“Customer Referral Program and we are confident that it will provide you with a solid foundation to help you achieve your financial goals through the Smart PayPlan.These are some of the commissions you will be paid : Fast Retail Bonus, Cashback bonus, Money Box, Builder Brick Bonus, Generation matching bonus, Business development bonus, Vyvo ranks. This is your opportunity to have financial freedom.”

“The fastest growing markets worldwide great products with real market demand, an easy customer referral program that is completely free to join the lucrative compensation, the most exciting instant bonuses in the industry.” 

Earnings beyond modest supplemental income go beyond pale

As it has in other similar actions, DSSRC noted that any claims for income beyond a very modest supplemental income go beyond the pale.

“DSSRC expressed its concern that such earnings claims convey the message that participants in the company’s business opportunity can generally expect to earn significant and career-level income,” ​the council’s statement read.

Earlier this year FTC announced a rulemaking procedure​ to combat what it calls “false earnings claims by multilevel marketers, for-profit colleges, and ‘gig economy’ platforms.”

In the sales of dietary supplements by MLMs, earning claims have been an Achilles heel for the for years.  In separate actions Herbalife agreed to pay a $200 million fine​ to settle an FTC claim and Advocare paid a $150 million fine​ and transitioned out of the MLM field entirely.

 At the height of the attack by activist short seller investor Bill Ackerman, Herbalife, the world’s largest MLM focused solely on nutritional products, began to be more transparent about the earnings potential of its platform.  Company officials admitted that most distributors make no money and for those that do, about $1,800 in monthly income was a reasonable expectation.  Now the company’s public statements about earnings potential only states: “We provide clear, accurate and timely disclosures to prospective Distributors regarding potential income.”

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