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Compliance Corner – December 2019 Article

Industry Lawsuits Update


In the last six weeks, the following lawsuits have come about:

FTC v. Neora (Nerium) November 1, 2019

  • FTC alleges that Neora is operating an illegal pyramid scheme and falsely promises recruits they will achieve financial independence if they join the scheme. They also allege that they deceptively promote inappropriate products claims.

Neora (Nerium) v. FTC November 1, 2019

  • Neora alleges that the FTC overstepped its statutory authority, that its practice of using guidance, public meetings, articles and statutes to “fence in” direct selling companies is an inappropriate abuse of power”

FTC v. Advocare – October 2, 2019 – 150M in damages

  • Owners abandoned MLM model. The settlement held company AND its former CEO responsible for the monetary damages along with 4 mid-level distributors (i.e., LifeVantage Pro 5/6 and above equivalent) also being named in the FTC complaint. Two of the named distributors were fined 4M in damages.

And within the last three years, the following lawsuits have been filed:
FTC v. Herbalife – July 15, 2016 – 200M in damages

  • Forced to significantly re-structure U.S. MLM business model, effectively making it very difficult for the company to operate in the U.S.

FTC v. Vemma – December 15, 2016 – 238M in damages

  • Shut down business, company was banned along with their CEO and top distributors from recruitment-based business ventures.

Here is a quick reminder of what they are looking for:

Product Claims Exaggerated/Outrageous Income Claims
Inappropriate and Unsubstantiated Product Claims (i.e., claims that a dietary supplement product is a drug that can be used to diagnose, treat, cure, or prevent any disease)
  • Express income claims
  • Implied income claims, including lifestyle claims and photos/images
  • Passive or residual income claims
  • Investment claims

While the facts of each case mentioned above were different, it is clear the FTC had concerns about how the companies and their independent distributors were misrepresenting their respective income opportunities and, in the case of Neora/Nerium, the efficacy of their products.

Here is a quick reminder of the regulatory agencies that are watching direct sellers and dietary supplement marketers like LifeVantage (to list a few):

Food and Drug Association (FDA)
Therapeutic Goods Administration (TGA)(Australia)
Health Protection Branch (HPB)(Canada)
State, Territorial & Provincial Attorneys General
Federal Trade Commission (FTC)
Securities and Exchange Commission (SEC)
State, Territorial & Provincial Agencies

The LifeVantage legal and compliance departments provide our independent distributors with compliance training and education to help you build a legally compliant and ethical business. Remember to always check the back office for new training videos, articles, handouts, etc. by going to “backoffice/library/compliance.”

If at any time you should have questions, please contact the Compliance Department directly at compliance@lifevantage.com.

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We dare to imagine an abundant world where both physical and financial health is optimized. We believe your well-being matters. That’s why we’ve combined the cutting-edge research of nutrigenomics with a leveraged plan to build your own legacy.

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