Mannatech, The Latest Network Marketing Company To Bite The “Illegal Health Claims” Bullet
Download the Mannatech legal complaint
The Texas attorney general, Greg Abbott, has filed a lawsuit against Mannatech Inc. in a state district cou
rt located in Travis County. The legal complaint accuses Mannatech of violating state and federal health and safety codes and the state deceptive trade practices, willingly enabling the company’s force of freelance associates to use illegal health claims on their websites.
Specifically, the Mannatech lawsuit cites the defendants for marketing and selling dietary supplements (glyconutrients) as a way to cure, mitigate, treat, or prevent diseases, illnesses, or serious conditions. Mannatech earned in excess of $400 million in 2006.
It is illegal for a company to market a product as a treatment for a disease without approval from the U.S. Food and Drug Administration.
The attorney general seeks a permanent injunction and a fine of $25,000 for each day the company violates state law, as well as unspecified reimbursement for consumers who have bought Mannatech products. The charges may result in $20,000 per violation.
Let’s take a look at the associate websites cited by the legal complaint. The website, www.glycohealthservice.com, which belongs to a Mannatech associate, is used to promote Mannatech products:
The site is full of illegal health claims and insinuates that Mannatech’s products will reverse a terminal condition.
Another Mannatech associate website used to promote products is www.livingsugars.com. This site prominently illustrates illegal claims, gloriously trumpeting the miraculous healing properties of glyconutrients:
The third associate website cited, www.healthtestimonies.com, presents a series of audio recordings with four different marketing products which feature various doctors:
These audio recordings, all of which include multiple illegal claims, contain testimonials for twenty-four conditions which are identified on the website as: Arthritis, Asthma, ADD, Brain Aneurysm, Breast Cancer, Cancer, Cataract, Cerebral Palsy, Diabetes, Diabetic Blind, Fibromyalgia, Golf Ball Brain Tumor, Heart Failure, Lou Gehrig’s Disease, Low Back Pain, Micro Valve Prolapse, Muscular Dystrophy, Osteoarthrtis, Peripheral Neuropathy, Progeria, Prostate Cancer, Retinopathy, Rotor Cuff Pain, and Streptococcal Toxic Shock Syndrome.
The last website cited in the complaint is www.glycotools.com. This website is exclusively dedicated to selling Mannatech sales aids, including dozens of CD’s, DVD’s, brochures, and other promotional materials. An example is the screenshot below displaying a CD entitled “How I Conquered Cancer:”
The website is owned and operated by Dupli-Pack, which is also a prominent vendor at Mannatech’s corporate events. Many of the products sold on the website include very specific and illegal health claims.
The legal complaint goes on to deride Mannatech’s Compliance enforcement:
“Defendant’s compliance program is also ineffective, in part, because rather than actively monitoring associates, Defendants rely on “self-regulation” (i.e. the reporting of violations by other associates or consumers). Moreover, even when a complaint is reported, Defendants fail to take any reasonableaction to discipline violating associates, especially if the associates are high ranking associates who make a lot of money for Defendants.
On occassion, Defendants take “disciplinary action” against Mannatech associates in the form of a written or verbal warning to stop making illegal disease claims. But such disciplinary action is only illusory, intended to create the impression that Defendants take real enforcement action.
In fact, Defendants fail to follow up on such warnings to ensure that the associate has stopped making illegal claims, or take any further action to deter associates from makingillegal health claims. Some associates have received multiple warning letters from Mannatech, but continue to make illegal claims without repercussion.
Moreover, defendant (and Mannatech CEO) Caster refuses to allow any more serious enforcement action to be taken against high ranking associates. For example, on at least two occasions, Defendants’ Compliance Committee has met and made a recommendation to terminate and/or suspend for a significant period of time a high ranking associate because of egregious illegal disease claims.
In each case, however, becasue the associate was a highly productive associate, Defendant Caster has overruled the Compliance Committee’s recommended punishment and instead given the associate a slap-on-the-wrist.”
In Response to the legal action, Mannatech’s Investor Relations contact was quick to issue a response:
“We are aware of the situation and will be taking appropriate action to address any issues or concerns from the Texas Attorney General’s office,” said Terry Persinger, Mannatech’s President. “We take matters of this nature very seriously and intend to cooperate to reach a resolution.”
A note to network marketing brands: Do not file patents for your health products that claim to cure, mitigate, treat or prevent.
Mannatech filed a patent that listed more than fifty diseases or conditions that can be cured, mitigated, treated, or prevented by using Mannatech’s products.
The solution. Here is what Mannatech and many other health-related network marketing brands need to do regarding their web strategy:
1. Identify non-compliant content and continue to monitor the visibility of associate websites in the search engines.
2. Identify non-compliant content and continue to monitor the visibility of associate claims on message boards and social media websites like Myspace.com.
3. Identify non-compliant content and continue to monitor the visibility of associate blogs and press releases online.
4. Create and enforce a comprehensive online compliance policy.
5. Create and enforce a search engine advertising policy.
6. Eliminate/mitigate negative visibility in the search engines, including complaint sites, negative reviews, and disgruntled customer or associate content.
7. Eliminate trademark infringement in the natural and paid results of search engines.
8. Eliminate/mitigate trademark dilution in the paid results of search engines.
Network marketing companies need to take back control of their brands and engage prospects directly online:
9. Create multiple, professionally designed web assets, optimized to rank for the brand’s hundreds/thousands of frequently searched keywords in the search engines. Create high converting leads forms with pull marketing assets and engage consumers and busi
ness opportunity prospects directly.
10. Create multiple, professionally designed landing pages to advertise on the search engines and convert highly motivated brand traffic into retail sales and new associates.
11. Implement a lead program where direct retail customers and leads are assigned to participating associates for a monthly fee. Not only will this eliminate the web-savvy associates from trying to one-up each other on the search engines by making false claims or guarantees, but this also serves as a revenue center to fund your entire web strategy, while at the same time, insuring that online prospects are properly followed up with.
12. Create a professionally designed blog to engage the brand’s audience(s) by providing updates on company news, advancements, new products, compliant testimonials, compliant success stories, meetings and events, conference calls, incentive prizes and trips, etc. This is designed to mobilize your force of associates as well as engage and inspire new prospects.
If you are a corporate leader for a network marketing company, you may have questions.
Ayohwahr Interactive is the leading and most experienced brand marketing and brand protection agency for direct selling and network marketing brands in the U.S.
I can address your concerns and further explain the elements of a winning and compliant strategy. Our team can execute a comprehensive brand protection, brand marketing, and lead generation and distribution program, all while generating positive ROI. Contact us to Command your Brand!
Technorati tags: Mannatech lawsuit, network marketing compliance, illegal health claims