Operators of multilevel marketing (MLM) company Forever Living will be permanently prohibited from making deceptive earnings claims to resolve Federal Trade Commission allegations that the company deceived consumers into believing that they could earn profits from the venture when the vast majority of participants made little or no money.

In its complaint, the FTC alleged that Forever Living Products International LLC, its CEO Gregg Maughan, and its President Aidan O’Hare, as well as Forever Living.com LLC, used deceptive earnings claims to attract new participants called Forever Business Owners (FBOs), most of whom made no money or even lost money. The company and its operators claimed participants could make money by selling Forever Living’s health and wellness products either in person or online through the company’s website and by recruiting new participants who would do the same.

“Today’s complaint alleges that Forever Living deceived prospective workers with false and unsubstantiated earnings claims. Forever Living misled workers with promises of substantial income that, in reality, bore little to no resemblance to what participants actually earned,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Deceptive earnings claims do not just mislead workers—they divert workers away from genuine, income-generating jobs. The FTC will not hesitate to take action against companies that deceive workers with claims of false earnings that they know few, if any, will achieve.”

Through in-person meetings and conferences, internet and social media posts and videos, and print materials, Forever Living used images of luxury cars and giant checks, and claims of profits ranging from extra income to replacing a full-time job to tout the potential earnings from selling its products or recruiting new FBOs, the FTC alleged. For example, in an online marketing video O’Hare told viewers, “We will be paying millions in bonuses next year. The only question is, whose name goes on that check?”

The FTC alleged that most FBOs did not make any money and many lost money after factoring in expenses such as the cost of shipping products. In fact, according to company data, in each of the last five years at least 77% of FBOs who purchased, sold or recruited during the year did not receive any compensation. Even after two full years as FBOs, more than 89% of new participants had not received enough income from Forever to recoup their initial $300-plus start-up cost.

The FTC also alleged that, for years, the company’s public income disclosure statements falsely implied that everyone who had chosen to pursue the MLM income opportunity was making money, and that others who “joined” Forever only wished to purchase products “at a discounted price” and had “elected not to participate in [the] Marketing Plan.” In truth, Forever knew that nearly 90% of FBOs had received no income from Forever, and it had no basis for suggesting they were not trying to make money.

The FTC further alleged the company’s training materials encourage FBOs to tout Forever Living as a flexible way to earn extra money in order to recruit new participants. For example, in one training video, FBOs were told to show pictures of cars they may have received from Forever Living’s incentive program or destination events they attended and to tout that “this is a business where you can earn a lot of income.” Forever Living also has misled FBOs with claims that they are likely to earn money based on purchases or sales made by FBOs they recruit, known as their “downline,” when the company’s data shows that less than 7% of FBOs received income from the sales and purchases made by their downline FBOs, according to the complaint.

Under the proposed order settling the FTC’s allegations, Forever Living, Maughan and O’Hare:

  • Must have substantiation for any earnings claims and must provide substantiation for any earnings claim they make if a U.S. consumer requests it;
  • Must not misrepresent that participants have made, will or are likely to make or receive earnings (or any particular amount of earnings);
  • Must not misrepresent the reasons participants do not make money in Forever’s MLM, including claims that participants who do not make money aren’t trying to;
  • Must not misrepresent that participants are likely to recruit others into their downline; and
  • Must not misrepresent other facts about the MLM opportunity that would be important to consumers.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 2-0. The FTC filed the complaint and final order in the U.S. District Court for the District of Arizona.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The lead staff on this matter include Elsie Kappler and Andrew Hudson from the FTC’s Bureau of Consumer Protection.

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