Ger-Ro-Mar v. FTC , 518 F.2d 33 (1975)

Ger-Ro-Mar v. FTC

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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

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Published In: MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:Federal, 2nd Circuit, New York | United States

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.

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