Features

New publication expands and replaces 1998’s dietary supplement guidance to cover all health-related products

On Dec. 20, 2022, the Federal Trade Commission’s (FTC) Bureau of Consumer Protection released the first revision to its business guidance of health products in 25 years. The newly released Health Products Compliance Guidance is a significant update to the Commission staff’s 1998 guide, Dietary Supplements: An Advertising Guide For Industry.

As evidenced by the change in its title, one of the major changes to the guidance is that all health-related claims will now be covered—not just the marketing of dietary supplements. The agency has incorporated decisions from many of the law enforcement actions that were brought since the previous guidance was released in 1998. 

Furthermore, the new publication includes other FTC guidance updates that have been made over the past few decades, such guidelines on testimonials and endorsements as well as the policy statement on the marketing of homeopathic drugs.

Companies optimistic about growth in European and Asian markets

By:  SSN Staff

While the volatile economy, inflation, and geopolitical conflict in Europe have proven to be significant challenges for many direct selling companies’ top-line sales of late, the final months of 2022 have seen several direct sellers expand their markets, research hubs, and operations on an international scale.

Amway Expands Research and Development Operations

Amway announced recently plans to expand its research and development reach on an international scale. In a Dec. 8 release, the Ada, Michigan-based company revealed its plans to open a Business Innovation Hub in the Central Business District of Singapore.

Promoted as a springboard for its next stage of strategic growth in Asia, the new hub will allow Amway to accelerate and support product innovation in the country where it has provided health and wellness products and entrepreneurial opportunity for over 20 years. Amway cites the evolving wellness needs in the Asian as well as global markets as its motivation to proceed with this strategic expansion. 

The Commission seeks public comment in latest ANPR

By:  David Bland

On Nov. 17 the Federal Trade Commission (FTC) held an open virtual meeting to explore changes to the Business Opportunity Rule through an Advance Notice of Proposed Rulemaking (ANPR) and to invite public comment on a potential expansion of the Rule to include other types of money-making opportunities not currently covered by the current Rule. The Commission is also seeking the public’s opinion on the effectiveness of the existing Rule as well as whether it should be retained or eliminated.

Implemented in 2011, the Business Opportunity Rule requires sellers of business opportunities to provide prospective participants and buyers with specific information seven days before an agreement can be finalized, including a disclosure statement about the business.

CEOs report a ‘turbulent,’ ‘volatile,’ and ‘challenging’ Q3

By:  Dave Rauf

“As we look ahead, we anticipate continued COVID-related inflationary and economic challenges in many of our markets.” —Kevin Guest, CEO, USANA

USANA

USANA Health Sciences reported a turbulent third quarter, as inflationary pressure coupled with COVID-19 disruptions in Asia led to double-digit sales and profit declines. 

The weaker-than-expected performance during the quarter prompted USANA to lower its full-year guidance for 2022, as the company reported lower sales than the same period a year ago in all of its markets. 

A stalled economy and push for new rules by the FTC presented challenges to direct sellers in 2022

By:  SSN Staff

January Headlines

US Chamber Leads Pushback Against ‘Rogue’ FTC

The U.S. Chamber of Commerce sent three letters to FTC Chairwoman Lina Khan on Nov. 19, 2021, objecting to recent actions by the Commission that the Chamber considers to be abuses of power. The Chamber’s letters address three topics reflecting some of the actions and decisions made by the Commission since the 2020 election cycle—“zombie” votes, undue political influence, and the FTC’s use of the Penalty Offense Authority.

New owner files lawsuit against former company executives; SEC charges former CEO

By:  Stephanie Ramirez

Washington DC, USA - June 25, 2018: US Securities and Exchange Commission building exterior. The U.S. Securities and Exchange Commission or SEC enforces the federal securities laws

NewAge, a Utah-based health and wellness direct seller, has endured a turbulent year as bankruptcy filings, lawsuits and regulatory scrutiny have plagued the company over the past several months. 

The company was recently sold to a “stalking horse” bidder for $28 million. The U.S. bankruptcy court approved the sale in late September 2022. However, just days after taking ownership, the new owner of NewAge hit former executives of the company with a lawsuit outlining a myriad of grievances.

The new owner, DIP Financing LLC, whose only known representative is John Wadsworth, provided the sole bid to purchase NewAge at a price grossly insufficient to allow for any sort of recovery for equity holders or creditor claims. 

ANPR seeks public comment on potential new rule

By:  David Bland

“Case-by-case enforcement without civil penalty authority may not be enough to stem the growth of deceptive reviews and endorsements.” —Federal Trade Commission

Customer Experience and Online Review Concept. Female holding SmartPhone to Reading Customer Review before Buying Products

On Oct. 20, the Federal Trade Commission (FTC) released an Advanced Notice of Proposed Rulemaking (ANPR) to seek public comment on the benefits of a new rule to combat the harms from deceptive or unfair product reviews and endorsements. The ANPR represents the Commission’s first official step in evaluating the need for and the shaping of a new rule.

Continuing its push to create additional enforcement mechanisms after the Supreme Court took away the FTC’s ability to obtain equitable monetary relief under Section 13(b) of the FTC Act, Chairwoman Lina Khan sees the rulemaking process as an essential tool for combatting industry-wide violations across many types of businesses, including the direct selling channel.

Unresolved income and health claims lead to FTC referrals

By:  SSN Staff

The Direct Selling Self-Regulatory Council (DSSRC), in its fourth year of operation, is concluding another productive and busy year monitoring the U.S. direct selling channel. 

Founded by the Direct Selling Association (DSA) and administered by BBB National Programs, the DSSRC serves as an independent non-profit organization tasked with providing mechanisms for the oversight and self-regulation of direct selling companies across the country.