The Federal Trade Commission (FTC) has filed a lawsuit accusing Neora, a multi-level marketing company formerly known as Nerium International, of operating as an illegal pyramid scheme since its founding in 2011. The complaint names Neora and its owner, Jeff Olson, detailing a business model that allegedly prioritizes recruitment over genuine product sales.
The FTC's investigation concluded that Neora's compensation plan improperly emphasized recruiting new distributors rather than selling products to consumers outside the organization. This structure made it difficult for distributors to profit from sales to the public, a hallmark of legitimate multi-level marketing.
A key element of the FTC's accusation centers on Neora's mandatory autoship requirements. Distributors, referred to as "Brand Partners" (BPs), were required to purchase a minimum of 80 Personal Volume (PV) worth of products monthly through an autoship order. Alternatively, they could generate 200 PV in sales to retail customers. The FTC argues this setup incentivized distributors to focus on recruiting others to buy products for personal use rather than on selling to external consumers who demonstrated actual demand.
Analysis of commission structures revealed that BPs not enrolled in autoship received no discount on products, making sales from their personal inventory potentially unprofitable even at full retail price. For those on autoship, profit margins were reportedly slim or non-existent. Neora itself admitted to the FTC that less than 1% of all rewards paid out by the company came from commissions on sales to retail customers.
The financial outcomes for Neora distributors were stark. According to the company's own recent reporting cited by the FTC, fewer than 5% of BPs in the United States earned more from Neora than they spent on fees and product purchases. A significant majority, at least 92%, of Neora's BPs reportedly quit the company, with half departing within six months or less. The difficulty of achieving profitability through product sales and recruitment meant that over 85% of participants failed to advance beyond the lowest ranks of the company's eighteen-level hierarchy.