Neora Part II: Lessons About Deceptive Claims

In Part One of our series about the pivotal decision in the Neora case, we provided a high-level overview of the court's decision and its potential widespread effect on the direct sales industry. In this article, we focus on the court's analysis of the FTC's claims that Neora was responsible for deceptive claims made by its distributors—Brand Partners ("BPs")—in addition to those Neora allegedly made directly, and key points that can help your company minimize FTC scrutiny related to similar claims.

SUMMARY OF THE FTC'S DECEPTIVE CLAIMS ALLEGATIONS

The FTC alleged that Neora was violating Section 5(a) of the FTC Act by making deceptive claims (1) that BPs are likely to earn "substantial income" and (2) about the health effects of EHT and Neora's EHT products. The FTC also sought to hold Neora responsible for not only its own direct representations but also the representations of its BPs under agency principles. In addition, the FTC alleged Neora violated