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Douglas Brooks
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Summary: Mr. Brooks is a lawyer in Concord, Massachusetts. Over the past 30 years Mr. Brooks has litigated a wide variety of civil cases nationwide, including matters involving franchising, dealerships and product distribution, as well as securities, antitrust and consumer protection class... More
  • International Coalition Requests Federal Trade Commission To Protect Consumers From Multi-Level Marketing Schemes 3 comments
    Oct 25, 2013 9:05 AM | about stocks: HLF, NUS, MTEX, USNA

    An international coalition of consumer activists, internet bloggers, entrepreneurs and professionals has filed a petition requesting that the Federal Trade Commission investigate the multi-level marketing industry and protect consumers from fraudulent and deceptive practices. Multi-level marketing (NYSE:MLM) firms purport to offer business opportunities in which consumers can supposedly make money both by selling products person-to-person and by recruiting more participants who will then recruit even more participants in an ever-expanding chain. The petition states that "[t]he MLM industry has proven incapable of regulating itself, is rife with fraudulent and deceptive earnings claims and has caused - and will continue to cause - untold financial harm and misery to the poorest and most vulnerable of the consumers whom the Commission was formed to protect."

    Last December hedge fund investor Bill Ackman drew attention to Herbalife (NYSE:HLF), one of the largest MLM firms, stating that Herbalife is a pyramid scheme and that his firm, Pershing Square, had sold short a billion dollars worth of Herbalife stock, betting that it would fall to zero. Since then a number of consumer groups, Hispanic and African-American organizations and politicians have urged the FTC to investigate Herbalife.

    The Petition filed by coalition states that the problems with MLM are not limited to Herbalife and that existing laws are not sufficient to protect consumers.

    Members of the coalition include long-time MLM critics such as Dr. Jon Taylor (, Robert Fitzpatrick (, Stephen Barrett, M.D. ( and, Rick Ross ( and, as well as internet activists and bloggers who have focused attention on MLM firms such as Amway, Shaklee, Nu Skin (NYSE:NUS), Usana (NYSE:USNA), Mannatech (NASDAQ:MTEX), Vemma, Lyoness and Herbalife. The coalition also includes former Wisconsin Assistant Attorney General Bruce Craig, former North Carolina Assistant Attorney General Kristine Lanning, economist Stacie Bosley of Hamline University, author and researcher on entrepreneurship Dr. D. Anthony Miles, and cult expert and mental health counselor Steve Hassan. The coalition includes members from India, China, Ukraine, Finland, Canada, Britain and Austria, reflecting the fact that MLM is an international problem. The petition was filed by attorney Douglas M. Brooks, a member of the coalition who has litigated a number of class actions against MLM firms.

    The coalition is an ad hoc group which is not incorporated and was organized solely to file the Petition with the FTC. The full text of the Petition, the list of members of the coalition and information on how consumers can get involved are available at

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I am periodically consulted by investors interested in the MLM industry who may be long or short or considering investments in the stocks mentioned in this article.

    Stocks: HLF, NUS, MTEX, USNA
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Comments (3)
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  • Jonathan Brand
    , contributor
    Comments (229) | Send Message
    I'm seeing thousands of victims at
    1 Nov 2013, 07:57 AM Reply Like
  • Douglas Brooks
    , contributor
    Comments (51) | Send Message
    Author’s reply » For regulators to act it is important for victims to stand up and be counted. I hope that will provide a safe forum for MLM victims to tell their stories and realize that they are not alone, and demonstrate to regulators and legislators that the MLM industry needs serious attention.
    1 Nov 2013, 09:56 AM Reply Like
  • Jonathan Brand
    , contributor
    Comments (229) | Send Message
    From the blog, it looks like that's exactly what it's doing. It's a safe haven where Amway victims, Herbalife victims and other victims of mlm are communicating.
    1 Nov 2013, 05:20 PM Reply Like
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