The FTC and most states under deceptive claims laws, prohibit unsubstantiated or misleading claims about products.

MLM companies and direct sellers are among the biggest sellers of health and cosmetics products in the world. Some of the largest companies are traded on the New York Stock Exchange (NYSE), such as Avon or Herbalife. Because of concerns about safety of its customers, as well as U.S. Food and Drug Administration (FDA) and Federal Trade Commission (FTC) regulatory scrutiny of labeling and product claims, MLM companies expend tremendous financial and professional resources to remain compliant with the rules promulgated by the FDA for the marketing of health, cosmetic and personal care products. The FDA publishes extensive guidelines for product claims. In the dietary supplement area, Congress has instructed the FDA on such guidelines with DSHEA, the Dietary Supplement Health Education Act of 1994. And, even with DSHEA exemptions for substantiated “structure function claims,” any claims in the nature of therapeutic treatment of actual medical conditions, are prohibited. And if such claims are made, the products may be removed from the over the counter market as unapproved “drugs.” In addition, the FTC and most states under deceptive claims laws, prohibit unsubstantiated or misleading claims about products. MLM companies, in turn, publish extensive compliance guidelines for distributors as to what may be represented or prohibited by way of “unauthorized product claims” in the marketing of products. Companies take this issue quite seriously, as inappropriate product claims that trigger regulatory action create a risk for the opportunities of all distributors as well as companies.  

View these related articles:

What Are Unauthorized Earnings Claims?

As a consultant, what can I say about a MLM company’s nutritional/dietary supplement products?

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In 1994, The Dietary Supplement Act enabled MLM companies and their distributors to amplify their statements on the benefits of dietary supplements. Under the 1994 Dietary Supplement Act, third-party literature and/or scientific studies, which are generic in nature, are allowed to be passed out to the public.

MLM companies that have specific data to backup their statements may make claims about ingredients in their products when the claims relate specifically to their impact on the structure and function of the human body, as opposed to medical therapeutic claims. For instance, under The Dietary Supplement Act, a direct sales company may comment that vitamin C is beneficial to connective tissue. Keep in mind, however, that this is not the same thing as claiming that a particular nutrient in a product will treat or cure a connective tissue disease.

For more information about earnings claims and unauthorized product claims, please visit the following links:

The FDA and Health Claims Article

Earnings Claims and Consumer Protection Laws Video

The Difference Between MLM Earnings Calculators and Earnings Claims Video

FDA Notification for Permissible Structure/Function Claims for Dietary Supplements

New Video: Earnings Claims and Consumer Protection Laws

MLM Company and Distributor Training on the Direct Selling Industry

Why do companies restrict the type of advertising carried on by their distributors?

FDA Health Claims: The Final Rules Article

FDA: New Health Claim Rules:

• Introduction
• A Historic Act
• The President Speaks
• And Congress Speaks Out
• The Impact on the Network Marketing Industry
• Why and How They Work
• Abuses Lead to Legislation
• Rules You Don’t Want to Break
• The Disclosure Issue

Choosing the Right Product for Your Direct Selling Company

Distributor Training – Two Common Questions

MLM and the FDA

MLM’s History with the Government

New Video – Unauthorized Medical Claims and FDA Issues

FDA to Issue Revised NDI Guidance – Nutraceuticals World Reports

Nutritional Supplements, Health Claims and MLM

MLM Attorney – How a MLM Lawyer Can Help Your Direct Selling Business

FDA to Issue Revised NDI Guidance – Nutraceuticals World Reports

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And, as always, visit MLMLegal.com, the best MLM resource on the web. The next Starting and Running the Successful MLM Company Conference will be here before you know it! On May 16^th and 17^th, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 64^th annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. (Can’t make this event? Keep an eye out for our October and February conferences as well.)

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Q:  Why do companies restrict the type of advertising carried on by their distributors?

A: Company rules regarding advertising are usually very detailed. Companies are zealous about protecting their trademarks. In addition, they want to avoid inappropriate claims about earnings opportunities or product properties, such as medical claims. The rights of the distributor and the network marketing company are determined by their contract, and specific restrictions on advertising are contained in the distributor agreement and the company’s policies and procedures.

For additional information on advertising and the network marketing industry, visit the following links:

“FTC Guidelines on Endorsements and Testimonials- Regulation of Advertising” Article

“Chasing The Competition” Article

“FTC Guidelines on Endorsements and Testimonials – Resource Center” Article

“FTC – Regulation of Advertising” Article

FTC Endorsement Guidelines Impact MLM/Direct Selling Blog Post

“MLM Startup – The Basics” MLM Corporate Startup Essentials

Comparative Guidelines for Advertising

What is the Relationship between MLM and the FTC?

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