The Court of Appeals held that the FTC had failed to prove that Symbra'ette's marketing plan was an unfair trade practice. The FTC alleged that Symbra'ette was an unsustainable pyramid scheme that violated state unlawful trade practice laws. However, the only evidence admitted to prove this position was the mathematical formula that if each distributor recruited 5 people, who further recruited 5 people, the entire country would be recruited to be distributors in a matter of months. While the court agreed that the math was sound, it failed to show that distributors were actually harmed by the structure of the marketing program. In fact, the only distributor to testify claimed that he had made a profit and was successful as a distributor. However, the court held that although the FTC had failed to prove their case, it did not mean that the company could continue to make certain advertised claims about the outrageous success of distributors. The court held that the distributor success claims were deceptive, and enjoined Symbra'ette from making them.
Full case and summary are available at: http://www.mlmlegal.com/legal-cases/GerRoMar_v_FTC.php
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.
MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates
Federal, 2nd Circuit, New York |
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Babener & Associates | Attorney Advertising