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The next FTC trial for Neora is one that the Direct Selling Association is fearful it will lose.

The DSA implores the court to take into account the repercussions of a pyramid scheme losing to the FTC at trial in an amicus brief submitted on September 16th.

The DSA begins their amicus brief by saying it

supports legal action against fraudulent pyramid scams that pose as genuine businesses.

That remark has to be addressed before we continue since the FTC’s case against Neora isn’t particularly complex.

Retail sales only account for a tiny fraction of Neora’s total revenue.

Neora told the FTC about it throughout their inquiry, so we know this.

The closest an MLM firm may come to a pyramid scheme is having less than 1% of its sales income allocated to retail sales.

While nothing is guaranteed, there is no doubt that Neora will lose their impending trial.

Surprisingly, the DSA dismisses the possibility that Neora is a pyramid scheme by telling the court that it “takes no opinion on the merits of this issue.”

It will instead concentrate only on the consequences of what could occur if this Court decides the legitimacy of a pyramid scheme that is at odds with established precedent and other judgments.

Despite our vehement support for the prosecution of unlawful pyramid schemes, DSA is worried that a wrong or too wide definition of an illegal pyramid scheme will have serious negative effects on DSA’s over 100 enterprises and have a chilling impact on the direct selling business channel.

This essentially means that the DSA is in favor of regulatory action against pyramid schemes without products but not against those that do.

Over the last 30 years, DSA has collaborated with state legislators to establish legislation that reflects prior FTC and federal judicial advice by defining illegal pyramid schemes in the law.

According to these regulations, a pyramid scheme is something that pays off largely through product sales rather than recruiting new members.

This assertion demonstrates how uninformed the DSA is on the present regulatory landscape. For well over a decade, tying a product to a pyramid scheme hasn’t been able to trick authorities.

The two prominent examples from recent years that spring to mind are Vemma and Herbalife. Both MLM firms settled before any lawsuit reached trial.

Vemma and Herbalife both agreed to modify their respective business models as part of those agreements.

Over 95% of those who join up to be Neora distributors lose money, which serves as another example of the harm that product-based pyramid schemes do to customers.

Again, we know this because Neora told the FTC directly about it. There is no room for doubt.

The DSA ultimately attempts to maintain the existing quo in which customers lose billions of dollars annually to product-based pyramid schemes.

The customer confidence and goodwill that lawful businesses have worked so hard to develop would be jeopardized by any decision declaring methods that had previously been found to be legal to be suddenly declared illegal.

Pyramid schemes centered on products are not genuine MLM businesses. They are frauds that use illicit commercial practices to carry out their operations.

The DSA informs the court that a “substantial percentage” of DSA members are in danger if a decision further establishes the illegality of product-based pyramid schemes in the US.

Neora belongs to the DSA.

It has already been determined that Neora will not pay monetary penalties if they lose their impending trial since payday loan fraudsters defeated the FTC in an unrelated Supreme Court case last year, the “AMG decision.”

Despite how depressing that sounds, the FTC still wants to safeguard customers against Neora’s pyramid scheme business model.

By the FTC’s late 2019 Complaint against Neora (formerly Nerium);

Nerium has functioned as an unauthorized pyramid scheme since its beginning.

Nerium’s reward plan prioritizes recruiting new BPs above the sale of goods to customers outside of the company, in contrast to a genuine multi-level marketing enterprise.

Because of Nerium’s business strategy, it is improbable that BPs will be able to generate money by providing their goods to actual customers.

US consumer damages due to fraud after the AMG judgment are estimated to be around $1.5 billion as of June 2022.

On October 17th, the FTC v. Neora trial is expected to begin.

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