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.
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