Testimonial use in MLMs

We already know that MLM often sell products with absurd health claims. Health claims that are not allowed by law. See here, here, and here about the laws around what health claims are allowable.

People in MLM schemes end up with products that are usually overpriced and of little actual use. The only way they can sell these products is to exaggerate their uses and make it sound like it has magical qualities. Have a look at TINA’s findings of false health claims made by MLMs.

Hence, you see posts like this on Facebook-

 

However, these sorts of claims are frowned upon by the law, advertising authorities and the companies themselves. The companies tell their reps, outwardly at least, that they must not make health claims. They have compliance departments that are supposed to be finding these claims and asking their reps to stop.

If these wildly inacurate and illegal claims are not allowed, how are people supposed to sell them?

Juice Plus have come up with a great idea. Share testimonials. Then people are not making claims, they are just sharing stories. Here is an email from their compliance department to a Bot Watcher.

 

 

“If someone has seen that the product has helped them with a specific condition, then we encourage them to tell their story in the first person”.

 

“share this story with your readers or tag them in the post.”

 

 

From this belief sprung the Juice Plus Testimonials page on Face Book. Here, people tell stories about how they took Juice Plus and their health condition improved. Here is a selection of some of those testimonies-

You can find any medical condition there and use their stories to put on your own page if you are selling Juice Plus and want to make health claims without actually making health claims. Reps end up discussing their customers and working out which of their products to recommend. Totally not making any health claims though. Here’s an example of one such discussion.

Well there you  go, The shakes must be ok in pregnancy, the rep says so. Even though she has no training. I’ve looked up the ingredients to see if there is any vitamin A in the shakes. There isn’t. Vitamin A can be found in their capsules, but not the shakes. I did find something interesting though. There was a link to click that was labelled

“California residents: Click here for Proposition 65 WARNING.”

I don’t live in California but thought I’d click anyway. This is what I found

The shakes can cause birth defects. This is pretty serious and it concerns me greatly that reps are telling other reps and customers that it is safe because they used it and they were ok.

It should be pretty obvious that sharing testimonials is a very bad idea. We don’t know the truthfulness of these claims and they could be very harmful. People may try and come off their medications, or have false hope for their condition. There are many, many conditions catered for on the Facebook page and shared widely.

The Law in the UK

Section 15 of the non-broadcast CAP advertising code states what sort of claims can be made for foods or food supplements.

 

So claims that Juice plus capsules can replace anti depressants would not be allowed. The claims that can be made are very clearly set out I these registers. But what about personal testimonies? Is it ok for someone to say that a product has helped with a condition?

There are some general rules that marketers must comply with when sharing testimonials-

1. The marketer cannot be the consumer and give their own testimonial.
2. The marketer must have written permission from the person making the testimonial.
3. The marketer mush hold evidence the claim is true- evidence of the ordering history, email records (not Hotmail, but a provable email address), address of the customer and be able to prove the testimonial is genuine.

 

This next bit is very interesting, found on this page on the CAP website.

“Marketers may not use testimonials to circumvent the Code by making claims in a consumer review that they would not otherwise be permitted to make. For example, if a marketer doesn’t hold the evidence to substantiate an efficacy claim, they cannot use a testimonial which makes that claim.

Testimonials alone do not constitute substantiation so marketers should not rely on testimonials as support for any direct or implied claims made in the marketing communication.”

What claims are Juice Plus allowed to make?

I asked the MHRA who regulate medicines and supplements in the UK if any health claims are allowed to be made by Juice Plus (and Ariix and Herbalife). This is their reply

Essentially, this means no health claims can be made for products from Juice Plus.

I told them about the Juice Plus Testimonials page and one of their investigators joined and had a look. They were very concerned about the sort of posts there and wanted to inform Trading Standards about the group. Unfortunately though, they realised the page originated in America so they could not do anything about it.

I never heard back about anything Facebook said. The page still exists so I am assuming they took no notice.

 

Conclusions

If you can’t make a claim for a product legally, you cannot get around it by using a testimony.

Making health claims that are not proven or allowed could lead people to believing it and ditching their medicines/ treatment. This could lead to significant harm.

If you sell a product, you cannot make your own testimonies when advertising it.

The strict rules around allowable claims are there for a reason, do not break them just so you can make a bit of money. Especially if you are taking advantage of ill people, this is despicable.

 

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Dodgy MLM Products List

Some products are legal to sell in one country but illegal in another. If you are in an MLM, you might want to check you are not breaking the law by selling prohibited products. It is no defence to say that you did not know. If you are saying you own a business and are selling products, you have taken on the responsibility for checking them out.

If you are a Bot Watcher, you may want to check the activity you are observing is legal, in case you want to complain.

Here is a list of some of the prohibited items I have come across. It is by no means an exhaustive list. Please send me information on any products you come across that need to be added.

Vida Divina

This item is a drug in UK law and needs to be sold with a prescription. It cannot be sold through MLM channels.

 

Sleep N Lose by Vida Divina has Melatonin in it which is not licenced in the UK to be sold outside of a pharmacy without a prescription.

People selling this could be reported to the MHRA or the ASA.

 

 

This email was sent to a rep and she put it on Facebook.

 

See Botwatchblog’s analysis of Vida Divina.

 

Forever Living

Forever living do not have any products listed with the MHRA for medicinal use, including for use as a Traditional Herbal Remedy.

There are no allowable health claims for their products.

In the EU, companies can apply to their own country’s authorities for authorisation to sell their Aloe Vera products as a constipation cure, but that would be the only allowable claim.

In the USA, the FDA removed Aloe Vera as an allowable drug to be sold over the counter. It is now used there as a supplement. The US Department of Heath and Human Services say this about Aloe Vera.

Forever Living’s products are not illegal to sell, but it is illegal to sell them as being medicinal in any way in the UK. I imagine it would be pretty hard to sell the products without being able to make any claims about Aloe Vera, especially when you bear in mind that testimonials are not allowed either, even verbally.

 

Juice Plus+

Juice Plus+ are not registered with the MHRA in any way so they are not allowed to make any health claims for their products in the UK. Their products are classed as supplements.

Please be aware that there is vitamin A in these products so they really should not be used by pregnant women.

 

Ariix

On the 11th September 2017 I came across this message on Facebook from an Ariix seller.

“Higher levels of ingredient than UK legislation likes” means illegal then!

So Optimals, Power Boost, Beauty Boost and Restoriix are illegal to sell in the UK. I have asked Ariix for clarification. Here is their reply

 

Valentus

Valentus are trading illegally in the UK. See what happened to Charlotte Thomson in this Daily Mail report.

Do not buy or sell any of these products in the UK.

For more on this MLM, see this post on Botwatchblog.

 

Xerveo

 

Ganoderma mushroom does not have any allowable health claims in the UK. If this coffee is sold in the UK, there can be no weightloss claims made about it or any other claims that it can do anything to your bodily functions. It can only be sold as a normal coffee.

At £40.95 for 24 servings, that is expensive coffee.

 

How to check for illegal health claims

In the EU, there is a database you can check to see if the claims for your product are illegal or allowed.

Please check here before making claims or copying adverts for products with medicinal properties. Clicking on the link takes you to this page-

Please click here to check out claims made for food ingredients. This is the page you get when clicking the link.

Search here for the scientific information about an ingredient and its uses.

 

To check if a product has this allowable use in individual countries, you need to check the individual country’s databases. In the UK, it is the MHRA that police this.

This database lists all the names of products, the company that makes it, and the allowable claims for it.

 

 

 

 

 

 

 

 

Vida Divina breaks the law

Vida Divina launched  on 23rd September 2017 in the UK.

Here is their website.

Here is a list of their products. (note the products for ‘diabetes and prostrate health’!)

This is one of their products

Here is the supplement information

Do you see the word ‘melatonin’ there?  Melatonin is found in the body and it helps to regulate sleep. Research has shown it has some slight benefits in helping people temporarily with their sleep problems due to jet lag or irregular shift patterns. It helps only a very small amount and is not recommended for long term use or for standard insomnia.

In America Melatonin is classed as a supplement, and as such, sellers are allowed to make claims about it. In the UK, however, it is a drug. The listing for it is in the British National Formulary.

This means that Melatonin cannot be sold as a supplement in the UK. It has to be prescribed by an authorised prescriber and come from a pharmacy. Vida Divina cannot sell it in their Sleep-N-Lose capsules. This would be breaking the law.

Which makes me wonder why it is for sale on Ebay in the UK.

Ebay have been alerted to this breach of the law and they say that they will respond to each report of this item being sold as they get to it.

Come on EBay, it isn’t the public’s responsibility to report these incidences to you. You need to stop allowing these sales! And stop them now!

Vida Divina, you need to stop sending this product to the UK. You are being very irresponsible and need to ban this product immediately.

I will ask for Ebay and Vida Davina’s comments on this issue and report back their answers here. Don’t hold your breath for a swift resolution though.

 

Trading Standards

Someone has contacted Trading Standards about Vida Divina and their reply was very interesting.

So to sell Vida Divina products in the UK, sellers need to –

+Register with local environmental health authority as a food business operator.

+Get special labels made up for putting on the products that comply with the law.

+Ensure that there is no mention of any health benefits to the products unless they are on the correct register.

+Ensure there are no new novel foods in the range.

Please note the bit that says ‘you could be prosecuted’.

I contacted the MHRA for clarification on melatonin sales in the U.K. This is what they said

 

A bit more information to help you decide if you want anything to do with this company.

A bit on the background of the CEO, from Behind MLM. There are details on how he claimed the products in his last MLM cured him of his terminal cancer. And the problems previous MLM companies had that h was involved in.

This extract is from the above link.

This video has come to light from Facebook. The man is working for Vida and is in America now at their conference. Look what he is advising his followers.

 

Is this how a company imports their products? He is advising they all stuff their suitcases with coffee and ‘blag customs’. How are 70 people going to explain suitcases full of improperly labelled coffee being brought into the UK to be sold illegally as weight loss products?

 

Other products they sell

Vida Divina sell tea as well. “Is that ordinary tea” I hear you ask, “or is it special tea?”

Have a look at this advert that has been brought to my attention

There’s so much wrong with that advert, it’s difficult to know where to start! Needless to say, there is no such thing as ‘detoxing’ your body, tea won’t cure IBS, 95% of viruses aren’t from the bowel and this tea will not ‘have your insides back to healthy in no time’. It is certainly breaking advertising rules.

I have been shown this email where Vida Divina seem to be saying that the tea is not for resale in the UK, which would make the above advert even more dodgy.

I have emailed Vida Divina today (26th Sep 2017) for a statement on whether their products are for resale in the UK and what their plans are for the products. I will keep you updated.

Let’s hope the reps aren’t buying too much of the stuff because then they’ll either have to sell it illegally, drink it all themselves or have it building up in their house.

Oh.

Do you know what the authorities call this type of business? The type where there are no customers and you can only earn money through recruiting?

 

 

 

The Legal Bit

 

This page is currently under construction but has been published early because it could be useful to people now, before it is complete.

I am not qualified to give legal advice and this page should not be taken as such.

I have gathered together some of the common laws that are relevant to trading schemes in the UK.

Timeline of UK Pyramid laws.

1973 Fair Trading Act 1973, section XI Pyramid selling and similar schemes is passed.

1973 Pyramid selling regulations were produced, based on the Fair Trading Act.

1989 Pyramid selling schemes regulations 1989 and amendments 1990 revoked the 1973 Pyramid selling scheme regulations 1973.

Trading schemes Act 1996 is passed which produces the Trading schemes regulations 1997. They revoked the regulations from 1989.

So now we have the Fair Trading Act 1973 (section XI), with some changes and the Trading scheme regulations 1997. Hopefully in the near future these regulation will be updated again to counter all the dodgy goings on that we see now.

 

 

What is a pyramid scheme?

In the UK, the term ‘Pyramid scheme’ is used interchangeably with ‘direct selling’ and ‘Multi Level Marketing’. MLMs tell you that pyramid schemes are illegal but their scheme is legal. This is not true. All these schemes are subject to the same rules and they are deemed to be legitimate if they adhere to the relevant laws. Here is an extract from the government research paper that describes the changes and development of the Trading Scheme Regulations Act. The paper describes how Amway tried to have the term ‘pyramid scheme’ designated to mean an illegal scheme. They were unsuccessful. We just have legitimate or non-legitimate pyramid schemes.

 

Joining fees.

Regulation 10 The Trading Schemes regulations 1997 You cannot pay more than £200 in the first 7 days of joining a scheme.

 

Cancelling a membership.

Also from the Trading Schemes Regs 1997.

Regulation 5 (e) you can cancel your membership within 14 days and get your money back.

You can return goods you purchased to a UK address and get a refund.

The scheme is not allowed to charge you for returning the products.

 

Returning stockpiled goods.

Regulation 6. You can return goods you purchased upto 90 days before leaving. The scheme has to refund you but can deduct a handling charge. This is because often people in these schemes end up stockpiling products because of the pressure to purchase and the difficulty in selling.

 

Members have to sell a product or service to others.

This is from The Trading Schemes Act 1996 section 1

A scheme is illegal if people are purchasing goods for themselves only or if there are no goods or services.

Translation in simpler language-

a) People in MLMs have to supply products or services.

b) These products or services

(i) are to be sold to customers by the people in MLMs or

(ii) Are to be used for helping the member make sales. For example-  samples                  for helping the member demonstrate products to customers.

Either way, products cannot be sold to members just for their personal use. There has to be involvement of customers.

 

Advertising MLM schemes

Any advert trying to encourage people to join an MLM must satisfy certain criteria under The Trading Schemes Regulations 1997, namely

The name and address of the company should be mentioned.

The goods or services should be mentioned.

The ‘statutory wealth warning’ (see next section) must be included and not be a smaller font than the rest of the advert, and must not be hidden away.

 

Any written advert (e.g. Facebook post etc) that describes a brilliant opportunity that can earn you money, join me now, I need more people on my team etc should satisfy the above criteria. Many scheme participants choose to hide the name of their company or omit the warning. This is breaking the law.

 

Statutory Wealth Warning

This is schedule 1 mentioned above.

Making promises to prospects

This is from  The Fair Trading Act 1973, from the wonderfully named section XI called ‘Pyramid selling and similar trading schemes’.

(3) means that an MLM participant cannot persuade another member or potential member to make a payment, based on a promise that they will get payments for recruiting others.

(4) means that the person making these promises is breaking the law.

 

Penalties for breaking the above laws

 

This is from the Fair Trade Act 1973, section XI (Pyramid selling and similar trading schemes). I think it is self explanatory. People involved in these schemes might be encouraged by their uplines or company to break these laws. There are penalties and you could end up in prison.

Fraud

The Fraud Act 2006 describes the different ways people can be guilty of fraud.

Section 2 (fraud by false representation)  If a person lies, or implies an untruth, and they gain from this lie, and the lied-to person is exposed to a risk of loss, this is fraud.

Section 3 (fraud by failing to disclose information). If a person omits to tell something that they are legally bound to disclose, and this omission leads to someone being exposed to a risk of loss, or the liar gaining, this is fraud.

Section 4 (fraud by abuse of position). This happens when someone occupies a position where they should be safeguarding someone’s financial position. If they then lie or omit to tell the truth and that causes the liar to gain or the victim to be exposed to a loss, this is fraud.

I can think of lots and lots of examples where MLM companies and the recruiting members commit fraud. It is pretty widespread. These companies and the recruiting participants are taking quite a risk because the potential repercussions are a fine and/or up to  ten years in prison. TEN YEARS!!

The Fraud Act 2006 apples to companies, as well as individual people so that the people running the business could be found guilty and subject to a fine or prison sentence.

 

 

False advertising

Adverts in the UK are governed by the CAP code. The Advertising Standards Authority oversees this code. Here are some of the sections-

Section 8 Promotional marketing. This section reminds people to ensure their raffle/ lottery/ prize draw complies with the Gambling Act 2005 and data protection legislation. It covers offers that may be made, such as ‘buy one, get one free’, sales, competitions and prize draws.

Section 13 Weight control and slimming.  “A weight-reduction regime in which the intake of energy is lower than its output is the most common self-treatment for achieving weight reduction. Any claim made for the effectiveness or action of a weight-reduction method or product must be backed, if applicable, by rigorous trials on people; testimonials that are not supported by trials do not constitute substantiation”.

“Vitamins and minerals do not contribute to weight reduction but may be offered to slimmers as a safeguard against any shortfall in recommended intake when dieting”

“Health claims in marketing communications for food products that refer to a rate or amount of weight loss are not permitted”

“Claims that an individual has lost an exact amount of weight must be compatible with good medical and nutritional practice. Those claims must state the period involved and must not be based on unrepresentative experiences. For those who are normally overweight, a rate of weight loss greater than 2 lbs (just under 1 kg) a week is unlikely to be compatible with good medical and nutritional practice. For those who are obese, a rate of weight loss greater than 2 lbs a week in the early stages of dieting could be compatible with good medical and nutritional practice”

Section 12 Medicines, medical devices, health related products and beauty products. Adverts must not offer advice on the treatment or diagnosis of an illness or condition. They must not falsely claim that their products can cure anything. There are links in this section to other laws and resources to assist in working out if any rules have been broken.  The MHRA have a Blue Guide that has more details on medicine reporting.

 

More on health claims

According to Regulation 2 of the 2012 Human medicines regulations, and amended since then

A medicinal product is:

• any substance or combination of substances presented as having properties of preventing or treating disease in human beings
• any substance or combination of substances that may be used by or administered to human beings with a view to restoring, correcting or modifying a physiological function by exerting a pharmacological, immunological or metabolic action, or making a medical diagnosis

 

Medicinal products have to be carefully tested and registered with the MHRA for them to be considered medicines. To tell if a product has been through this process and is properly registered, it will appear on the MHRA’s medicines information database.   The European Medicines database covers the whole of the EU, including herbal remedies and veterinary products. Look up a product on these lists. If it isn’t there, no health claims can be made.

 

Libel and slander

When faced with criticism scheme participants will often cry slander or libel, often inaccurately. This is a brief description just to help clear up any misunderstandings if you are accused of either. The relevant law is the Defamation Act 2013.

Libel is defamation of a person that is written down. The complaining person does not need to prove they have been damaged by the comments made.

Slander is defamation of a person that is verbal. The complainer has to prove that they have been damaged by it.

For both types of defamation, the burden of proof rests on the defendant. For example, if I complain that you lied about me, and I have been harmed by that lie, you have to prove you are telling the truth. If you say it, you have to be willing to prove it.

If a comment is made and someone is upset about them but the comment is true, this is not libel or slander. This is why people say things like ‘I believe you are running a scam.’

To avoid being accused of libel or slander, do not tell lies on purpose. If you are saying something you think might offend or upset a powerful, rich and litigious company, be sure to make it clear your statements are based on facts or your beliefs.

 

 

To be added soon-

How to complain