REPORT: Shady Multi-Level Marketing and Direct Selling Companies Received $100M in PPP Funds Despite False Claims About COVID-19 Treatments, History of Deceptive Marketing
WASHINGTON, D.C. — Government watchdog Accountable.US released a new analysis, previewed by the New York Post, that identified a number of direct selling companies – which frequently engage in predatory multi-level marketing practices – that raked in over $106 million in forgivable Paycheck Protection Program (PPP) loans. Several of these beneficiaries have been warned by the Federal Trade Commission about making unlawful claims regarding the health benefits of their products in treating COVID-19 and the amount of money their participants could make. Meanwhile, tens of thousands of small businesses in communities of color were shut out of the PPP under the Trump SBA’s poorly designed and managed program.
“That the Trump administration allowed so much taxpayer money to go to companies known for using predatory practices to sell snake oil products, is an insult to all the struggling mom-and-pop shops that went under because they couldn’t access a single dollar of relief funds,” said Kyle Herrig, president of Accountable.US. “It’s another reason why the new Congress must turn the page on the disastrous Trump-McConnell mismanagement of the health crisis and pass a real relief package targeted at families in need, not those who scam them.”
KEY POINTS FROM THE REPORT:
- Zurvita, Inc., which received $1.39 Million in forgivable PPP money just weeks after receiving an FTC warning letter regarding social media posts that “unlawfully advertise that certain products treat or prevent [COVID-19].
- Pruvit Ventures, Inc., which received $719,251 in forgivable PPP money just over a week before receiving an FTC warning letter regarding claims about its products effectiveness against COVID-19 and misrepresenting how much its business opportunity participants are likely to earn.
- Total Life Changes, LLC, which received $977,200 in forgivable PPP money just over a week after receiving an FTC warning letter regarding claims about its products effectiveness against COVID-19 and misrepresenting how much its business opportunity participants are likely to earn.
- Vemma Nutrition Company, a direct seller that received $227,500 in PPP money, was ordered to pay a $238 million fine that would be partially suspended with a smaller payment and the surrender of certain assets, while also prohibiting business practices that created a pyramid scheme.
Neora, LLC, a company that received $2.5 million in PPP money, was sued by the FTC in November 2019 for operating as a pyramid scheme, while “deceptively promot[ing]” its supplements as cures for Alzheimer’s disease, Parkinson’s disease, and other neurological conditions and ailments.