Current and former high-level doTERRA wellness advocates agree to civil penalties and injunctions
By: David Bland
“The FTC, in my opinion, is going to continue to push on egregious misleading claims no matter the form; I do not think their enforcement efforts will be limited to COVID-type claims.” —Katrina Eash, partner, Winston & Strawn LLP.
The U.S. Department of Justice (DOJ), together with the Federal Trade Commission (FTC), announced on March 3 permanent injunction orders and civil penalty judgments against three current and former distributors for doTERRA International LLC. doTERRA, a Utah-based direct seller founded in 2008, markets essential oils, health supplements and personal-care products.
The government actions were in response to allegedly deceptive COVID-19 product claims made in public webinars by the high-ranking distributors in January 2022. The distributors —a California-based pediatrician, a Georgia-based nurse practitioner, and a Utah-based former registered nurse—allegedly promoted their products to prevent, reduce the severity of, or cure COVID-19 and Long COVID-19. The doTERRA representatives also made claims about counteracting negative side effects of the COVID-19 vaccine.
Company Reps Allegedly in Violation of the COVID-19 Protection Act
Passed in December 2020, the COVID-19 Protection Act “makes it unlawful under Section 5 of the Federal Trade Commission Act for any person, partnership, or corporation to engage in a deceptive act or practice in or affecting commerce associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19 or a government benefit related to COVID-19. The Act provides that such a violation shall be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under Sec. 18(a)(1)(B) of the FTC Act.”
The FTC’s March statement alleged that the Georgia-based nurse practitioner, a Diamond-level distributor, made health claims such as the ingredients in one product “have had some great studies behind them as far as helping with COVID, post-inflammatory response and viral replication,” and that another product could help prevent or treat Long COVID-19 “because of the oils in there like tangerine and cilantro, which help the body detox and also repair.”
The Utah-based registered nurse, also a Diamond-level distributor at the time of the webinars in question, allegedly claimed that there is “amazing research on essential oils that inhibit the SARS-CoV-2 spike protein” relating to chemical compounds that are “in several of our oils.”
According to the Commission’s statement, the California-based pediatrician and Blue Diamond-level distributor allegedly claimed that her products were a part of “COVID prevention basics” and “pediatric prevention/support for COVID.”
She also claimed that “…there’s lots of studies that show that oregano is effective against a coronavirus, which is the family that COVID is in,” and that “…lemon and geranium essential oil inhibit the mRNA transcription of the virus.”
Each of the three defendants agreed to pay $15,000 in civil penalties and to permanent injunctive relief requiring them to:
- Stop making unfounded COVID-19 claims, including the claim that a product can prevent, cure, or treat COVID-19 unless the Food and Drug Administration has approved the claim.
- Back up any health claims with human clinical testing to establish scientific proof. The defendants are also prohibited from misrepresenting that a product’s benefits are scientifically or clinically proven.
The Commission voted unanimously (4-0) to refer the complaints to the DOJ and to approve the proposed consent decrees. The DOJ filed the complaints and proposed decrees in U.S. District Court in the Northern District of Georgia, the District of Utah, and the Central District of California.
DoTERRA Warned in 2020 About Distributor Claims
The recent joint FTC and DOJ actions came three years after an April 2020 warning letter from the FTC alerting doTERRA about COVID-19 claims being made by its distributors as well as misrepresentations about opportunities for “substantial income” as doTERRA business opportunity participants.
The 2020 letter cited several essential oil marketing claims including “immunity boosters,” COVID-19 prevention hashtags as well as a claim that “all we need to do to beat corona virus, we need to take more alkaline foods that are above pH level of the virus.”
The letter concluded by reminding the natural products company that it would be held responsible for the claims of its business opportunity participants and representatives.
DoTERRA Resolves DSSRC Inquiry in 2021
In 2019 the Direct Selling Self-Regulatory Council (DSSRC) initiated an inquiry regarding several health and income claims made on the social media pages of some doTERRA distributors. The company responded by contacting the independent representatives to remove the problematic posts as well as working to remove unauthorized statements from former distributors.
According to the DSSRC’s report, doTERRA confirmed that it would “engage its distributor compliance program by: (i) actively monitoring and removing distributor non-compliant claims from the marketplace; (ii) using appropriate intellectual property rights and remedies to address distributor and former distributor non-compliant claims; and (iii) employing contractual enforcement mechanisms to help distributors be compliant.”
The Council recognized that doTERRA acted immediately to remedy the deceptive claims and acknowledged that the claims made by its salesforce members did not comply with the Company’s Policy and Procedures.
The DSSRC determined that doTERRA had taken good faith actions to remove product performance and earnings claims and closed its case on Nov. 8, 2021.
Companies Encouraged to Remind Representatives of the Risks of Making Deceptive Claims
Legal advisors working with direct selling companies are urging their clients to use the examples of the recent FTC targeting of network marketing distributors to emphasize the importance of marketing both products and business opportunities within the guidelines set by the Commission.
“These types of actions are a good tool for direct selling companies to remind their field that they need to comply with the policies and procedures. The field cannot make misrepresentations, and if they do, they will be held responsible,” says Katrina Eash, partner, Winston & Strawn LLP.
“Our clients have gone on record to advise their field not to talk about COVID-19,” continues Eash. “They are advised that they cannot make claims about the prevention, treatment or cure of COVID-19. Most clients forbid mention of COVID all together.”
Eash also suggests that the Commission’s recent targeting of distributors will continue for all types of misleading and deceptive claims.
“The FTC, in my opinion, is going to continue to push on egregious misleading claims no matter the form; I do not think their enforcement efforts will be limited to COVID-type claims.”
The Direct Selling Association (DSA) echoes the belief that the FTC’s enforcement actions on companies and distributors will continue.
“The FTC has made increasingly clear the last few years that they will hold individual distributors and even corporate executives liable. Enforcement actions, settlements, and comments to DSA in public and private forums have reinforced this view,” says Brian Bennett, senior vice president government affairs and policy, DSA.
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