MLM sees its earnings, disease treatment claims sent on to FTC for possible enforcement

04-Jan-2023 - Last updated on 04-Jan-2023 at 17:41 GMT

©Getty Images - serggn

ViSalis, a multilevel marketing company that sells supplements and functional foods, has seen its earning and disease claims referred to the Federal Trade Commission and the California Office of the Attorney General after allegedly declining to participate in a third party review.

The referral was made by the Direct Selling Self Regulatory Council, a division of BBB National Programs. The DSSRC reviews both the claims MLMs make about product performance as well as claims about the earnings potential of participating in the direct selling scheme.

In the same process as holds for reviews by the National Advertising Division, if the parties in the case either don’t respond or fail to make the recommended changes, the case is referred to FTC and other relevant authorities for possible enforcement action.

The DSSRC statement indicates ViSalis, which has existed as an MLM for more than a decade, was making a host of disease treatment claims on its products. According to the DSSRC statement, these include claiming to treat or prevent diabetes, fibromyalgia, cancer, arthritis, and migraine headaches.

Outlandish earnings claims

The inquiry also included concerns regarding earnings claims conveying the message that participants in the ViSalus business opportunity can expect to earn significant or career-level income.

For example, a video that plays on the ViSalus home page includes the following claim made by an unidentified individual who said: “There is an opportunity here that you can make a lot of money and it can change your lifestyle in a big way.” The same promoter was shown holding up a large format check in the amount of $1 million.

Another anonymous promoter stated, “We’re talking just three to five hours a week that can drastically change your lifestyle.”

Another claim by the narrator of video went: “Challenge promoters can earn anywhere from a few hundreds of dollars a month to a hundreds of thousands of dollars per month.”

None of the individuals in the video are identified, so it’s unclear if they are actual ViSalis distributors or are paid actors.

Looming robocall fine

ViSalis is also embroiled in a consumer protection case brought in Oregon that has dragged on for several years. A jury found that the company had made 1.8 million illegal robocalls. The original judgement in the case was for almost $1 billion in damages, based on a fine of $500 per call. An appeals court judge subsequently upheld the fine, saying it was based on simple math.

In October a federal appeals court ruled that while the $500 per call penalty made sense, the aggregate amount of the fine did not, and sent the case back to a lower court for a ruling on a revised fine. The company’s lawyers were advocating for a fine of $1 per illegal call.