Group targets gig economy companies, multi-level marketers, and for-profit colleges
Consumer Federation of America (CFA) responded to a request for comment from the Federal Trade Commission (FTC) on proposed regulations around deceptive earnings claims. Specifically, CFA called out gig economy companies, multi-level marketing firms, and for-profit colleges for practices that deceive individuals into believing they'll be able to live a certain lifestyle by using their products. Unfortunately, CFA notes, these claims often turn out to be unsubstantiated.
The FTC announced in February it is considering regulatory action to restrict such claims and subsequently called for comment on proposed rules.
In a comment letter, CFA called for specific action to require substantiation of earnings in marketing claims.
“99% of multilevel marketing recruits lose money,” the comment letter states, citing a 2011 statistic from the Consumer Awareness Institute. The comment letter also points to unsubstantiated and evidence-free earnings claims by gig-economy companies and explains how these companies target minorities and women. CFA joins NCL in asking the FTC to regulate companies making these claims by requiring substantiated data prior to making such claims, requiring “verifiable, easy-to-understand” income disclosures, and prohibiting deceptive lifestyle claims and imagery.
“Too many consumers have been enticed by unsubstantiated and false claims about income and lifestyle by these companies,” said Erin Witte, CFA’s Director of Consumer Protection. “We are glad to comment in support of the FTC proposal and urge the Commission to take the next step in the rulemaking process so that the FTC can continue its work of returning money to defrauded consumers.”