National Consumers League

Former senior FTC officials call on Congress to oppose pyramid scheme promotion bill


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September 13, 2017

Contact: Cindy Hoang, National Consumers League, (202) 207-2832, cindyh@nclnet.org

Washington, DC—A bipartisan group of former senior Federal Trade Commission (FTC) officials have called on House leadership to oppose “pending legislation that would dramatically curtail the Commission’s authority to bring appropriate enforcement actions” against fraudulent pyramid schemes. In a letter to House Speaker Paul Ryan (R-WI) and House Minority Leader Nancy Pelosi (D-CA), the officials called on House leadership to support the removal of an amendment sponsored by Congressman Jon Moolenaar (R-MI) from must-pass appropriations legislation.

“Our concerns are shared by a broad coalition of consumer and Latino advocacy organizations, and even prominent members of the direct selling industry itself,” wrote the former senior officials. “We are concerned that the proposed legislation would create unnecessary uncertainty and result in impairing the ability of the FTC to protect consumers against deceptive schemes.”

The letter noted the FTC’s 40+ years of success in prosecuting fraudulent pyramid schemes that deceptively lure consumers into supposedly lucrative business opportunities, where the vast majority of members lose money in order to enrich schemers. The Moolenaar amendment, wrote the former senior officials “would unnecessarily create new opportunities for legal challenge to enforcement; even worse, the provisions could put practices now recognized as harmful and deceptive beyond the reach of the law.” 

“Despite claims to the contrary by some in the direct selling industry, this legislation would not provide helpful clarification as to legitimate direct selling business practices, or strengthen consumer protections against fraudulent pyramid schemes,” noted the former senior officials. “Instead, it would undermine the FTC’s ability to effectively police these deceptive practices, and we fear they would spread, harming millions of consumers, and putting direct sellers who are committed to honest business practices at a competitive disadvantage.”

Signatories of the letter include former Chairman Jon Leibowitz, former Commissioner Joshua Wright, and former Directors of the Bureau of Consumer Protection William MacLeod, Lydia Parnes, Jessica Rich, and David Vladeck.

Full text of letter available here.

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The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.