The US direct selling industry is a $40‑billion economic engine, empowering over 13 million Americans—75 percent of whom are women—to earn supplemental and full-time income that helps pay for groceries, utilities, childcare and other everyday essentials. Yet despite this industry’s scale, transparency and decades‑long commitment to consumer protection, the Federal Trade Commission (FTC) continues to treat direct selling as an adversary rather than a partner.
The consequences are no longer theoretical. They are now reshaping the marketplace at the cost of thousands of job opportunities for independent contractors.
Forever Living’s US Exit: A Case Study in Regulatory Overreach
This is not a company fleeing accountability. It is a company that—like many others—has concluded that the FTC’s unpredictable, ever‑shifting standards make it impossible to operate a lawful direct selling model in the United States without risking existential harm.
The FTC’s Record of Failed Allegations: Neora Exposes the Problem
The FTC’s aggressive posture is not backed by consistent legal success. In fact, the agency recently lost one of the most consequential direct selling related cases in its history.
After seven years of investigation and litigation, a federal court rejected every one of the FTC’s claims against Neora, ruling that the agency failed to provide evidence for its pyramid‑scheme allegations and relied on unsupported assumptions.
This was the first time a direct selling company pushed back and defeated the FTC’s pyramid‑scheme theory at trial, a stunning rebuke of the agency’s approach. The court found:
- No evidence that Neora operated a pyramid scheme.
- No evidence that distributors’ claims could be attributed to the company.
- Stale or irrelevant evidence used by the FTC.
- No clear test from the FTC for what constitutes “overemphasis on recruiting.”
The ruling underscores what the DSA has warned for years: the FTC applies vague, subjective standards that even compliant companies cannot reliably interpret.
The Herbalife Settlement: A $200 Million Failure
The FTC’s 2016 Herbalife settlement required the company to pay $200 million for consumer redress. But the agency’s own refund program reveals a deeper problem: the FTC struggled to even identify harmed consumers, repeatedly mailing out rounds of checks because the fund could not be fully distributed.
This raises a fundamental question: If the FTC cannot locate the supposed victims of an alleged harm, was the harm ever demonstrated?
Even more troubling, the Herbalife order required the company’s thousands of distributors, small businesses across America, to collect and retain sensitive personal information (PII) from customers to prove they exist—despite the FTC’s own mandate to protect consumer PII. This contradiction exemplifies the agency’s bias and willingness to impose burdens that conflict with its own principles.
A Pattern of Forcing Companies Out of the Market
Forever Living is not the first company to scale back or exit the US due to regulatory hostility—and it will not be the last. The FTC’s pattern is clear:
- Aggressive investigations based on shifting theories.
- Settlements that impose operational structures no other retail channel must follow.
- Orders requiring intrusive data collection.
- Public statements that conflate legitimate direct selling with illegal schemes.
This environment does not protect consumers. It eliminates choice, destroys micro‑entrepreneurship, and disproportionately harms women, who make up the vast majority of direct sellers.
The Industry Has Reached Out—The FTC Has Not Responded
For years, the DSA has sought constructive engagement with the FTC. At the agency’s own request, the industry created the US Direct Selling Self‑Regulatory Council (DSSRC), an independent body that monitors income claims, product claims and marketing practices across the entire industry.
The DSSRC has issued public decisions, required corrective actions and referred non‑compliant companies to regulators. It is a model of industry‑driven accountability.
Yet the FTC has entirely ignored this good‑faith effort. Instead of collaborating with a functioning self‑regulatory system, the agency has moved the goalposts, applying new interpretations without guidance, rulemaking or stakeholder input.
Direct Selling Is Mainstream and Worth Protecting
Direct selling is not a fringe activity. It is a mainstream, community‑based retail channel that:
- Expands consumer access to wellness, beauty and household products.
- Provides flexible income opportunities for millions.
- Supports entrepreneurship in rural, suburban and underserved communities.
- Helps families bridge financial gaps during inflationary periods.
The FTC’s current posture threatens all of this.
A Call for Fairness, Clarity and Collaboration
The DSA is not asking for special treatment. We are asking for:
- Recognition of the industry’s self‑regulatory framework.
- Evidence‑based enforcement, not assumption‑based enforcement.
- A collaborative relationship, not an adversarial one.
The FTC’s mission is to protect consumers, not to dismantle an industry that empowers millions of them.
If the agency continues down its current path, more companies will follow Forever Living’s lead and exit the US market. Consumers will lose choices. Entrepreneurs will lose opportunities. And the FTC will have succeeded not in protecting the public, but in undermining one of America’s most accessible pathways to economic participation.
FTC Chairman Andrew Ferguson has an opportunity to end this attack on thousands of small businesses across America. He can do this by revisiting and reevaluating the FTCs assessment on existing orders against direct selling companies. He can require the FTC to stop treating this industry like a threat and find opportunities to work together to develop real solutions that protect American jobs.
DAVE GRIMALDI is the CEO of the Direct Selling Association, known for bringing fresh energy and impactful leadership to one of America’s most influential trade organizations. With a distinguished career spanning advocacy, policy-making and strategic leadership, Dave is uniquely equipped to champion the direct selling community at every level. Under Dave’s direction, the DSA is leveraging his deep legislative experience, extensive Capitol Hill relationships and strategic foresight to elevate the direct selling profession’s advocacy initiatives.
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