MLM PRODUCT CURES CANCER?
Editors Note: This is why your MLM - Network Marketing Company gets nervous about you making any health claims like cure disease, permenant weight loss etc. The FDA finds the material and passes it to the FTC to enforce action on the illegal health claims. Most MLM - Network Marketing companies have clauses in their Policies and Proceedures that let them terminate you if you say, "our MLM Company Product can cure cancer." Now you know 120 million reasons why! Rod Cook Ur editor
FTC Release: April 16, 2008
Appeals Court Affirms Order Requiring Seasilver Defendants to Pay Almost $120 Million in Diet Supplement Case
The Ninth Circuit Court of Appeals upheld a district court ruling requiring marketers of Seasilver, an alleged phony cure-all, to pay almost $120 million for failing to comply with an earlier order requiring them to pay $3 million in consumer redress.
The Court of Appeals decision, issued on April 10, 2008, affirmed a district court order requiring Jason and Bela Berkes, Seasilver, USA, Inc., and Americaloe, Inc., to pay almost $120 million under an agreement with the Federal Trade Commission. The March 2004 order barred them from making false or misleading claims and included a $120 million judgment that would be suspended if they paid $3 million within a specified time. The defendants did not meet the required payment terms, and in June 2006 a district court granted the Commission’s request to enforce the stipulated judgment. The defendants appealed the decision.
According to the FTC, the defendants claimed that the dietary supplement “Seasilver” was clinically proven to treat or cure 650 diseases, including cancer and AIDS, and cause rapid, substantial, and permanent weight loss without dieting. The agency alleged that the claims were false and unsubstantiated.
The Federal Trade Commission’s initial action against the defendants was part of “Operation Cure.All,” a comprehensive law enforcement and consumer education campaign to combat health-related fraud on the Internet. Law enforcement actions were coordinated among the FTC, the Food and Drug Administration, Health Canada, Canada’s Competition Bureau, and state Attorneys General against unscrupulous marketers who prey upon seriously ill consumers.
SeaSilver Settles
Business Allowed To Resume Conditional To FTC Demands
MarketWave Alert #27 (7/18/2003)
The MLM grapevine has been all abuzz the last week or so over encouraging e-mails from SeaSilver reps that the company has settled with the FTC and will be reopening for business soon. While those statement, in a vacuum, are technically true, it's not the whole truth. What's usually being left out of the story (likely due to sincere ignorance of the facts) is HOW they will reopen.
As I stated in the two previous conference calls I conduced earlier this month, even in a "best case" scenario (which I consider this to be), SeaSilver will expeditiously bend to any and all demands of the FTC and be allowed to resume business, but under very restrictive, prohibitive conditions.
That is exactly what has happened.
According to the Stipulated Preliminary Injunction that was issued and signed on July 15th, below is a list of what SeaSilver has to do. To keep things simple, I'll substitute "target product" (FTC nomenclature) for "SeaSilver," but keep in mind this order applies to any and all products produced by the "defendants."
1. Stop "making any representation about health benefits, efficacy, or safety of [SeaSilver]" unless the defendants have "competent and reliable scientific evidence." The injunction defines this as "tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results." In other words, very large, very long, very expensive, double blind placebo controlled studies - not personal testimonials.
2. Recall "all packaging and labeling, including all descriptive materials such as brochures..." for SeaSilver that makes any kind of medical benefit claims. This would appear to be the vast majority of such materials in use. Also, to recall the packaging and labeling is basically the same thing as a product recall (although, I suppose distributors could rip the labels off all the bottles they still have in inventory).
3. Provide to every person who purchases SeaSilver (or ANY product containing any of the ingredients also contained in SeaSilver) a "clear and prominent notice" that states, verbatim:
"Previously, SeaSilver has claimed that its product can cure cancer, diabetes, and a host of other serious diseases and conditions, and that it results in significant and permanent weight loss without dieting. No clinical studies support these claims. In fact, medical experts state that these claims are highly implausible and likely false. If you are under a physician's care, it is very important that you not discontinue or reduce any prescription medication without consulting your physician.
"In addition, at one time SeaSilver claimed that its product provided the health benefits of natural cranberries, although it contained no natural cranberry. Rather SeaSilver contained artificial cranberry flavoring."
4. Must receive from the purchaser of the product, or from the distributor who resold the product, "signed, written confirmation" that this notice was relieved and acknowledged.
5. Must send a copy of the entire 25 page Injunction to "each affiliate, subsidiary, division, sales entity, officer, director, employee, distributor, agent, ad broker, advertising agency, fulfillment house, call center, domain registrar, mail receipt facility..." etc., etc.
6. SeaSilver corporate must institute a program of surveillance to make sure that all reps abide by the order of the injunction (don't even remotely insinuate a medical benefit) and institute a zero tolerance policy resulting in termination of any distributor who violates the order.
7. The assets of the company and the individual defendants will remain frozen (other than $250 per day for "living expenses").
8. The court appointed reliever will remain in "full control" of the company. No time limit was stipulated.
A complete copy of the Stipulated Preliminary Injunction can be found at http://www.seasilver.com/pdf/corp/PI-stipulated.pdf
Commentary:
Part of the responsibilities of the receiver is to make "a good faith determination that the business can be lawfully operated at a profit." This rather innocuous looking provision may be more ominous that it appears. How "profitable" will SeaSilver be while operating under these conditions? How cooperative will their distributors be in abiding by these new restrictive rules? Not only will sales surely plummet with the obligatory disclosure described in #3 above included with every purchase, and with the complete elimination of any disease benefit claims from the entire marketing campaign, but this will very likely result in a mass exodus of sales reps (alas, most likely to one of the few other MLMs that are still making blatant, over-the-top medical claims about their products - it's already happening, folks!). And if any of those diehards that remain continue to make medical claims (even if they whisper them), bombs away.
Remember, if you want to avoid this happening to your company, use the same marketing approach Alka-Seltzer used back in the 70's - Try it, you'll like it!
If your products actually work, so will that approach.
Len Clements
MarketWave, Inc.
Rod Cook
Editor
MLM Watchdog
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