Courts may be signaling concern over the regulator’s authority to obtain injunctions and freeze assets in enforcement cases
By Spencer Reese, founder and partner at Reese Poyfair Richards LLC
The FTC uses the media to their advantage by issuing a press release that it has shut down a “purported” pyramid scheme, knowing that such a press release will effectively kill the company by scaring its distributors away.
The bottom line for direct sellers is that if the FTC loses its §13(b) authority, it loses its punch. Legitimate direct selling companies do not fear squaring off against the FTC so long as they are not blind-sided.
In 2014, a court-appointed receiver under the direction of the Federal Trade Commission (FTC) arrived at the corporate headquarters of Vemma with police in tow. Within a few days they had for all intents and purposes forced the company out of business. The company was given very little advance warning, and no time to mount any sort of sufficient defense.