Deep Dive Episode 101 – Litigation Update: Neora v. FTC
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On November 1, 2019, Neora, a Texas-based healthcare products multi-level marketing (MLM) business, filed suit in Illinois Federal Court against the FTC. The suit alleges that throughout three years of enforcement actions, the agency attempted to unilaterally and retroactively change the law governing MLMs without Congressional action or formal rulemaking. Neora asserts that in these types of regulatory enforcement actions other businesses are not only forced to try to prove their innocence, but they are forced to prove their innocence under standards that are not set forth by existing law. They argue that other businesses similarly situated are either coerced into resolutions/settlements or forced to fight.
Later on the same day, the FTC filed suit against Neora in New Jersey. The FTC asserts that Neora was unlike legitimate MLMs and was a “pyramid scheme” since its inception. The FTC argues that the company has focused on recruiting new distributors or so-called brand partners (BPs) and the vast majority of them don’t earn anything after expenses and quit.
Neora Co-CEO Deborah Heisz and lead litigation counsel Ed Burbach of Foley & Lardner will join us to describe their last four years of interactions with the FTC and the ultimate “fencing in” proposal that lead them to file suit.