FTC Threat: A Primer

Your questions answered on the FTC’s new battle plan against direct sellers

By:  David Bland

Is the direct selling channel under greater threat now from FTC action than it has been previously?

All signs point to yes. While the FTC has spent the past few decades consistently taking action against several direct selling companies accused of operating as pyramid schemes, the overall scope of this action has been limited. However, over the past year, the Commission has expressly stated that the direct selling channel is on the short list for renewed FTC scrutiny and enforcement. Furthermore, in a move catalyzed by the Supreme Court decision on 13(b) to strip the agency of its restitutive monetary relief powers, commissioners have begun the process to create new weapons for winning both equitable and punitive monetary relief in future proceedings.