PatrickPretty.com

Tag: Truth In Advertising

  • Is Jeunesse Rep Trying To Raid Vemma, Usana, Amway And Mary Kay Downlines? And Is Affiliate A Lawyer?

    A Jeunesse rep may be using Twitter in a bid to raid downlines of other MLMers.
    A Jeunesse rep may be using Twitter in a bid to raid downlines of other MLMers.

    On Oct. 24, the PP Blog reported that Truth In Advertising (TINA.org) had raised concerns about health-related claims surrounding the Jeunesse MLM, including a claim from an apparent rep that a product known as Jeunesse Reserve had reversed the course of gangrene in a patient with diabetes who was facing an amputation.

    Today the PP Blog is reporting that an apparent Jeunesse rep with a Twitter handle and email addresses that suggests he is a lawyer may be trying to raid downlines at MLMs such as Vemma, Usana, Amway, Mary Kay, Zhulian and others.

    Jeunesse did not respond immediately to a request for comment from the PP Blog. We’ll publish the comment, if received.

    Earlier today the Blog observed a Twitter promo from an account under the name “DH-mlm-lawyer.tk.” This was the headline in part: “ZHULIAN, VEMMA,USANA,AMWAY,MARYKAY [SIC] -REGSITER [SIC] AND CONVERT DOWN-LINES INTO OVERNITE WEALTH.” Included was a link to an affiliate site at JeunesseGlobal.com. The affiliate ID was “smcmktg,” with the rep listed as “David.”

    Included among the graphics of the promo was one that read “MLM Transfer Your Downline Into Overnight Millions.” Another graphic suggested that MLMers who moved to Jeunesse and took their downlines from other companies with them could earn more than $270,000 in two weeks and $800,000 in a month.

    Another graphic listed the names of Zhulian, Avon, Amway, Mary Kay, Herbalife, Shaklee, Nuskin, Vemma and Usana. It further claimed Jeunesse produced “OVERNIGHT MILLIONAIRES” and that people who moved their downlines from other companies to Jeunesse could “convert” those downlines into “millions” of dollars.

    Avon, Herbalife, Shaklee, NuSkin and Usana are publicly-traded companies. Vemma is the current subject of an FTC pyramid-scheme prosecution.

    Another promo for Jeunesse on the “DH-mlm-lawyer.tk” Twitter account suggested that Jeunesse somehow was affiliated with the Nobel Prize.

    The “DH-mlm-lawyer.tk” Twitter account also promoted a URL styled “mlm-lawyer.tk.”

    This post read, “Need MLM-Network marketing Help or advise? [Sic] How about an answer to EBAY PROBLEMS:”

    When the PP Blog visited the site, it was greeted by images of law books and a prompt that read, “FREE INITIAL 1/2-HOUR CONSULTATION.” “TK” is the top-level domain for Tokelau, a New Zealand territory of 1,300 inabitants  CNN described in 2012 as “The tiny island with a huge Web presence.”

    The purported MLM law site, however, appears to use a phone number in Thailand while not listing any professional credentials commonly associated with attorneys or a street address. A headline on a Blog associated with the site reads, “JEUNESSE GLOBAL DARLING OF WALL STREET.”

    Jeunesse is not a publicly traded company.

  • Jeunesse MLM Rep Pulls A Piccolo

    From an Oct. 23 TINA Tweet warning about Jeunesse-related health claims.
    From an Oct. 23 TINA Tweet warning about Jeunesse-related health claims.

    Truth In Advertising (TINA.org) reported yesterday that a website styled JeunesseReserve at a WordPress site had positioned the MLM juice offering Jeunesse Reserve as a product that will reverse the course of gangrene in patients with diabetes who are facing amputations.

    According to the product claim, a woman with diabetes had developed gangrene of the finger and no longer could bear the pain. Apparently requesting an amputation ASAP and waiting for a surgeon to schedule one, the woman started “taking 2-3 packs of RESERVE” daily.

    In the claim, the trademark symbol appeared alongside the word “RESERVE.”

    At a point uncertain after the “taking” of RESERVE had begun, the patient was told by the doctor that her blood flow had returned and an amputation no longer was necessary.

    Plenty of other health claims surrounded the gangrene claim, TINA reported.

    Over-the-top and potentially illegal health claims in the MLM realm are hardly new.

    “Achieve Community” Ponzi scheme figure Rodney Blackburn — who’d been pushing multiple cross-border HYIP scams simultaneously and even used video footage from the SEC’s website in one of his promos — ended up pushing a tea product amid claims it was “good for reducing diabetes” and mitigated the virus that causes AIDS.

    Longtime MLM huckster Phil Piccolo pushed a purported “magnetic” product positioned as a treatment for everything from bruising and hair retention to preventing the surgical amputation of limbs.

    Piccolo’s target audience additionally was told that the magnetic product could be used to help tomatoes, vegetables and fruits grow to “twice the size” while helping dairy farmers “produce more milk per cow.”

    Beloved family pets hearing a call from the grim reaper could extend  their lives if their owners used the products, Piccolo ventured.

    “Your pets? If you have a pet and your pet’s on its last leg[s], bring them a Magnetic Shower,” Piccolo coached. “You won’t believe what it will do for your pet.”




  • Vemma Tells Court Consumers ‘Possibly’ Took Unreasonable Risk In Joining Its MLM Program, But Did So Knowingly

    “Consumers represented by the FTC knowingly and voluntarily, and possibly unreasonably, exposed themselves to any claimed losses with knowledge or appreciation of the risk involved.” — Part of Vemma’s Sept. 30 defense to pyramid-scheme and deceptive-advertising charges filed by the FTC in August

    vemmalogoConsumers can be forgiven if they view part of Vemma’s defense to the FTC’s pyramid-scheme and deceptive-advertising charges as a reason to avoid the MLM trade altogether.

    Not taking time and expenses into account, the odds of losing money in MLM already are high and the odds of making money are low. But Vemma now is asserting that while the risk affiliates took when joining its program may have been unreasonable, they took it knowingly.

    Meanwhile, Vemma is claiming that “[a]ny losses sustained by the FTC and/or the consumers it purports to represent were caused by the acts or omissions of third parties over whom the Corporate Defendants had no control or right to control.”

    Vemma did not identify the third parties. But if the firm was referring to its own affiliates, including those who hyped the program on college campuses and through constant banging on social media, consumers again can be forgiven for avoiding the trade.

    There is little reason for consumers to trust any MLM if one of the industry’s most famous companies is saying it cannot control affiliates, especially if it earlier benefited from the toxic tradecraft of those affiliates.

    Vemma’s defense is pretty much a blanket denial of the FTC’s material allegations contained in the complaint here.

    Vemma critic Truth In Advertising has a link to Vemma’s response to the FTC complaint. (See Vemma’s Answer to FTC’s Complaint for Permanent Injunction here.)

    A week before Vemma filed its response, one of its top affiliates took to the web and made crude remarks about the FTC while at once asserting that Vemma itself had a “douchebag element” in its affiliate ranks. This occurred just days after CEO B.K. Boreyko had made an appeal for people to pray for the company.

    The firm’s defense that affiliates may have knowingly made an unreasonable choice in joining would come later.

     

  • URGENT >> BULLETIN >> MOVING: Evidence Before Court Leaves ‘Little Doubt’ FTC Will Prove Vemma Is Pyramid Scheme, Judge Says

    breakingnews7256th Update 6:41 p.m. EDT U.S.A. A federal judge has issued a much-anticipated order in the Federal Trade Commission’s pyramid-scheme case against Vemma that says “[t]he evidence before the Court leaves little doubt that the FTC will ultimately succeed on the merits in demonstrating that Vemma is operating a pyramid scheme.”

    U.S. District Judge John J. Tuchi is doing away with the receivership approach  established in August and instead will appoint a monitor, according to the order.

    This section of the order suggests the judge views Vemma’s products as marketable if it can get its sales process under control both in-house and externally. Even so, a limited restart may prove to be a hollow win for Vemma. Although the company will be able to restart operations under the order, Tuchi has banned the sale of “Affiliate Packets” and a compensation system that “links or ties an Affiliate’s eligibility for bonuses, or the Affiliate’s accumulation of bonus qualifying points, to that Affiliate’s purchase of the Corporate Defendants’ product, such as through autodelivery or Two & Go.”

    Was Vemma a good ambassador for the MLM trade?

    Vemma’s marketing material was “replete with deceptive income statements,” Tuchi found.

    And, the judge observed, “Some Vemma material also contains representations the Court would characterize as ridiculous—bordering on absurd—such that a listener could not reasonably be expected to believe them. ”

    From the order (italics added):

    In practice, [Vemma] Affiliates are very likely engaging in inventory loading. The great majority of Vemma product sales is to its Affiliates and, as [FTC expert witness] Dr. [Stacie] Bosley noted, under the current bonus system there is no way to unbundle the Affiliates’ intent to consume Vemma products as ultimate users from their desire to remain qualified for bonuses— bonuses that are largely driven by recruitment of other Affiliates. But their intent in purchasing Vemma products must be viewed in light of Vemma’s program design as well as its training and marketing materials, which explicitly provide that Affiliates should enroll in auto-delivery for the purpose of remaining qualified for bonuses.

    In all likelihood, Affiliates’ purchases of Vemma products are incidental to the right to qualify for and obtain bonuses . . .  Moreover, Vemma’s purported anti-inventory-loading safeguards are neither effective nor enforced . . .   Vemma contacts only 15 of its over 90,000 Affiliates a month to ask if at least 70% of their sales were for consumption or retail. And Vemma’s Vice President of Legal Affairs admitted in her testimony that the script for those calls does not really investigate the reason an Affiliate purchased product or check for inventory loading. Moreover, the Receiver found that, in practice, Vemma is five months behind on its inventory loading audits and has never suspended or disciplined an Affiliate who failed to make the requisite sales to ultimate users. And Vemma does not even attempt to apply a rule similar to the ten customer rule that was found to be a reliable way to control inventory loading in Amway. 

    Also from the order:

    ” The FTC’s evidence is certainly sufficient to show Vemma was operating an illegal pyramid scheme through 2014, and although evidence is not yet complete for 2015, the Court notes that Vemma’s 2015 “Two & Go” program contains the same indices of pyramidal structure as the former programs. Defendants have not produced evidence that the critical defects in their programs have been remedied since 2014, and the Court thus has no reason to believe at this stage that Vemma’s violations of the FTC Act are not continuing or likely to recur in the absence of injunctive relief. In sum, the Court finds the FTC has again met its burden to show a likelihood of success on the merits in demonstrating Vemma and Mr. [B.K.] Boreyko are operating a pyramid scheme, even in light of the argument and evidence provided by these Defendants.

    Tuchi has lifted the asset freeze, saying the monitor and court supervision and “an injunction against the alienation by Defendant Boreyko of any of his real estate holdings during the pendency of this action” should be enough to protect against mass dissipation.

    More analysis upcoming.

    Read the order at the website of Truth In Advertising, a Vemma critic that has worked with the FTC on the pyramid and deceptive-advertising case.

    Our thanks to the ASD Updates Blog.

  • In Asking Court To Reject Proposed Herbalife Class-Action Settlement, Objectors Point To Clawback Actions Flowing From Zeek Case

    EDITOR’S NOTE:  Clients of attorney Douglas M. Brooks object to the proposed Herbalife-class-action settlement on a number of grounds. This story focuses on only one of them: one that cites “clawback” actions flowing from the Zeek Rewards’ Ponzi- and pyramid case. The Zeek clawback actions underscore the litigation dangers MLM distributors may encounter after harrumphing for a mother ship alleged to be a fraud.

    Risk may be particularly elevated if distributors emerged with a profit or if they offered deceptive “leads” or “training” programs . . .

    The PP Blog accessed the objections of Brooks’ clients through the website of TruthInAdvertising, which also is objecting to the proposed Herbalife settlement.  The link appears at the bottom of this story . . .

    Source: Screen shot from federal court filing.
    Source: Screen shot from federal court filing.

    At least 18 individuals objecting to a proposed class-action settlement in Dana Bostick v. Herbalife International of America Inc et al say the $17.5 million settlement, as stipulated by both sides, could shield “high-level distributors” from “clawback” lawsuits.

    All of the objectors have filed complaints against Herbalife with the Federal Trade Commission, according to their Bostick declarations. They are represented by Massachusetts attorney Douglas M. Brooks.

    Brooks has litigated against Herbalife in the past and has advocated the position that “The Multi-Level Marketing Industry Causes Substantial Injury to Consumers.”

    In their objections, Brooks’ clients specifically argue that “The Release in the Settlement Stipulation is too broad in that it will release claims against high level Herbalife distributors.” As examples of the types of Herbalife distributors who could be sued for return of winnings, the objectors cite “leads” providers and providers of “training” courses.

    Although the Bostick case was not brought by the government, the FTC has been investigating Herbalife since March 2014. “[S]everal state Attorneys General” also are investigating the company, the objectors contend.

    Made “under penalty of perjury,” their affidavits in Bostick list complaints to the attorneys general of Illinois, Nevada and Connecticut.

    Should one or more agencies bring a case against Herbalife, lawsuits against certain individual distributors could provide an additional compensation remedy. This particular route to recovery would be blocked under the current stipulated settlement agreement, the objectors say.

    They also say the current pot of $17.5 million is far too small and that the stipulated agreement is defective in other ways.

    Objectors Cite Zeek, Fortune Hi-Tech Cases

    “The potential for claims against Herbalife’s high level distributors is not merely theoretical,” the objectors contend. “For example, in an action by the receiver arising out of the SEC’s prosecution of a multilevel marketing firm known as Zeek Rewards, the court recently certified a defendant class comprised of the ‘net winners.’”

    The case is known as Bell v. Disner. Kenneth D. Bell, a North Carolina attorney and the court-appointed receiver in the SEC’s Ponzi- and pyramid case against Zeek filed in August 2012, is suing more than a dozen individuals for a combined sum in the millions of dollars. He’s also suing certain alleged shell companies used by distributors to harvest illicit profits from Zeek.

    At the same time, Bell is suing more than 9,000 other individuals or business entities in a defendant class-action case that already has been certified by a federal judge. The class consists of U.S. Zeek affiliates who allegedly received sums in excess of $1,000 from Zeek.

    These actions combined pursue the recovery of about $283 million Zeek allegedly paid out to top promoters in an environment in which “over 92% of the money paid in to Zeek came from net losers.”

    Zeek appears to have created approximately 800,000 losers, according to court filings

    “[B]ecause ZeekRewards’ net winners ‘won’ (the victims’) money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims,” Bell wrote in March 2014.

    Since that time, he also has sued dozens of alleged Zeek winners with addresses in Australia, New Zealand, the United Kingdom, the British Virgin Islands, Canada and Norway. The actions also seek the return of millions of dollars.

    But the Zeek clawbacks are not a unique example of the type of litigation that may surface if an MLM company is accused of fraud, the Herbalife objectors represented by Brooks say.

    “In an action by the Federal Trade Commission and four state Attorneys General against the multilevel marketing firm Fortune Hi-Tech Marketing, the court-appointed receiver recently received approval to commence litigation against ‘highly compensated representatives,’” they say.

    NOTE: Access objection through TruthInAdvertising.org.