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Forever Living Products

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Forever Living Products International, Inc.
Company typePrivately held company
IndustryMulti-level marketing
Founded1978
FounderRex Maughan
HeadquartersArizona, United States
ProductsAloe vera- and bee-based products
Revenue$4bn (2022)
Number of employees
4100 (2006)
SubsidiariesAloe Vera of America, Forever Aloe Plantations, Forever Nutraceutical
Websiteforeverliving.com

Forever Living Products is a multi-level marketing company which was founded in 1978 in Tempe, Arizona by Rex Maughan.[1] The company has reported a network of 9.3 million distributors and revenue of $4 billion in 2021, and in 2006 they reported having 4,100 employees.[2][3]

History

Forever Living was founded in 1978 in Tempe, Arizona by Rex Maughan.[1] By the 1990s, Rex Maughan had purchased the Texas company Aloe Vera of America, with Aloe Vera of America selling its products to Forever Living for distribution.[4] Some journalists have likened the multi-level marketing business model of Forever Living's distribution system to that of a pyramid scheme.[5][6][7]

Forever Living Products headquarters in McCormick Ranch in Arizona in 2007. The company's resort division owns several similar properties.

In 1983, the company was named No. 6 on Inc. Magazine's annual Inc. 500 list of the fastest-growing private companies in the United States.[8]

According to Arthur Andersen's Top 100, as of 1993, Forever Living Products International was Arizona's second-largest private company.[9] As of August 1995, Forbes reported the company's product line included "deodorants, toothpaste, laundry detergent and three dozen other products, nearly all of which contain extract of aloe."[10]

A three-part special report by the Manila Times in 2003 discussed similarities between FLPI's business model and an illegal pyramid scheme, noting that FLPI participants are said to be rewarded primarily for recruiting new members to the organization, rather than for selling products to genuine end-users.[11]

Forever Living reported unaudited annual revenue exceeding $1.15 billion in 2005[2] and ended the year with around 150,000 distributors[12] and 55 employees.[13] The following year, Forever Living was listed at No. 340 on the Forbes 400 list, which ranks the largest private companies in the United States. At the time, the company was described as having 4,100 employees and sold its product in 100 countries.[2]

In 2010, the company reported unaudited revenue of $1.7 billion and a network of 9.3 million distributors.[3] In 2013 the publication New Vision reported that Forever Living had over 20,000 distributors in Uganda, of which only 83 had reached a managerial level and begun to recoup expenses; their investigation concluded that Forever Living Products' "distribution system does not guarantee profits and majority of members drop out along the way, after losing millions."[14] The company was active in over 165 countries as of 2018.[1] In February 2015, the company announced they had appointed a new management team to "oversee the affairs of the company in Nigeria."[15]

In January 2023, the company named Aidan O'Hare as President with Gregg Maughan, son of founder Rex Maughan, continuing as CEO.[16]

In 1996, upon suggestion of the American authorities, the Internal Revenue Service (IRS) and the National Tax Agency of Japan (NTA) initiated a joint audit of Rex and Ruth Maughan and related entities Aloe Vera of America (AVA), Selective Art Inc., FLP International, and FLP Japan for the period of 1991 to 1995.[17] In 1997, the NTA imposed a penalty tax of 3.5 billion yen on Forever Living's Japan division for concealing income of 7.7 billion yen over the five-year period.[18] Later that year, AVA, Rex and Ruth Maughan, Maughan Holdings, Gene Yamagata, and Yamagata Holdings[19] sued the IRS for unauthorized disclosure of tax return information.[18] In the midst of the lawsuit, The IRS asked the NTA to drop its decision against Forever Living, and in 2002, the agency "grudgingly complied with the IRS's request", announcing that the penalty tax had been effectively withdrawn.[18] In February 2015, a US district court ruled that the IRS knowingly provided some false information about AVA to the NTA, in violation of the United States' tax treaty with Japan[20] and awarded three of the plaintiffs one thousand dollars each in statutory damages.[20]

In 2004, claims made about Forever Living products were found to be in violation of several laws in Hungary related to advertising, registration of nutritional products, and the use of cosmetics as medicinal agents. As a result, the company was fined 60 million HUF (approximately US$280,000).[21]

In 2007, author Richard Bach made claims against the company for copyright infringement and trademark infringement.[22] The lawsuit stated that for over 20 years Forever Living had used the character, storyline, and copyrighted excerpts from the novel Jonathan Livingston Seagull to promote its marketing plan, and also used the motion picture and novel as its corporate logo.[23][24] The claim was satisfied through arbitration,[25] and shortly after, Forever Living changed its company logo[26] from a seagull to an eagle.[27]

In 2015, Forever Living was criticized by the UK Advertising Standards Authority for making false claims about the health benefits of its products, which were sold as a cure for various diseases ranging from diabetes to Crohn's disease. The company was also warned not to use health professionals in its promotional materials. Subsequently, the UK Medicines And Healthcare Products Regulatory Agency launched an investigation after it was revealed that NHS staff were moonlighting as sales people.[28][29][30]

Between 2012 and 2016, several lawsuits were initiated by the Environmental Research Center (ERC) against Forever Living Products over alleged violations of Proposition 65 (the Safe Drinking Water and Toxic Exposure Act).[31] The ERC accused Forever Living Products of having unsafe levels of lead in products manufactured by Aloe Vera of America and distributed by Forever Living.[32] The claims were determined to be unfounded and the case was dismissed in the California Supreme Court in October, 2016.[33]

See also

References

  1. ^ a b c "About Forever Living". www.foreverliving.com. Retrieved November 15, 2022.
  2. ^ a b c "The Largest Private Companies: #340 Forever Living Products Intl". forbes.com. 2006. Retrieved June 29, 2008.[dead link‍]
  3. ^ a b Emmert, J.M. (2011). "DSN Global 100: The Top Direct Selling Companies in the World". Direct Selling News. Retrieved June 6, 2015.
  4. ^ "ALOE VERA OF AMERICA INC v. UNITED STATES". Case Law. July 30, 2009. Retrieved June 6, 2015.
  5. ^ Wiles, Russ. "Dispute among partners puts Scottsdale's Forever Living Products in legal limelight". The Arizona Republic. Retrieved January 31, 2023.
  6. ^ "Forever Living's Neverending Deceptive Income Claims". Truth in Advertising. Retrieved January 31, 2023.
  7. ^ "These U.S. companies are still doing business in Russia". www.cbsnews.com. Retrieved January 31, 2023.
  8. ^ Richman, Tom (December 1, 1983). "Going Their Way – Whatever else catapulted them to the peak, it wasn't conformity to the norms of business". Inc.com. Retrieved May 27, 2015.
  9. ^ Huston, Jenni (November 12, 1993). "No. 2 private company is 'best-kept secret' in state. (Forever Living Products International Inc.) ( in state)". The Business Journal. Trove. Archived from the original on June 20, 2015. Retrieved October 4, 2019.
  10. ^ Palmeri, Christopher (August 14, 1995). "The aloe juice man. (Forever Living Products International)". Forbes. Archived from the original on May 30, 2015. Retrieved May 27, 2015.
  11. ^ Max de Leon (April 28, 2003). "A very thin line between multilevel marketing and pyramid schemes". Archived from the original on April 25, 2012.
  12. ^ "Forever Living Products hopes to see sales up in H2". Ziarul Financiar. August 2006. Archived from the original on August 4, 2008. Retrieved June 29, 2008.
  13. ^ "Forever Living Products hopes to see sales up in H2". Ziarul Financiar. August 2006. Archived from the original on August 4, 2008.
  14. ^ Kagolo, Francis (February 17, 2013). "Network marketing sucking billions out of Ugandans". New Vision. Retrieved January 29, 2015.
  15. ^ Bilbur, Jon (February 20, 2015). "Forever Living Product Gets New Management Team In Nigeria". The Tide News Online. Retrieved May 27, 2015.
  16. ^ "Forever Living Products International Announces New President". PR Newswire (Press release). January 14, 2023. Retrieved January 31, 2023.
  17. ^ Cope, Charles W. (February 2015). "United States Held Liable for Making False Statements to Foreign Tax Authority". copetax.com. Retrieved May 27, 2015.
  18. ^ a b c "Tax agency takes back penalty tax on U.S.-affiliate firm". Kyodo News International, Inc. July 26, 2002. Retrieved May 27, 2015.
  19. ^ "376 F. 3d 960 – Aloe Vera of America Inc v. United States". OpenJurist. July 19, 2004. Retrieved May 27, 2015.
  20. ^ a b Kroh, Eric (February 11, 2015). "Ariz. Judge Docks U.S. $3,000 For Disclosing Taxpayer Info". law360.com. Retrieved May 27, 2015.
  21. ^ "Hungarian Economic Competition Office fined FLP for 60 million HUF". Archived from the original on January 10, 2014. Retrieved November 25, 2011.
  22. ^ Schwabach, Aaron (2011). Fanfiction and Copyright. Ashgate. pp. 39–40. ISBN 978-0-7546-7903-5.
  23. ^ "Law Updates: Richard Bach et al".
  24. ^ "Bach v. Forever Living Products US, Inc., 473 F. Supp. 2d 1110". February 6, 2007. Retrieved May 27, 2015.
  25. ^ "Bach v. Forever Living Products U.S., Inc". Law Updates. July 13, 2007. Retrieved May 27, 2015.
  26. ^ Mansoor, A. "Forever Living Review: ForeverLiving.com Aloe Vera Products MLM Company". ScamWarning. Retrieved February 27, 2023.
  27. ^ "ASA Ruling on Forever Living Products (UK) Ltd". The Advertising Standards Authority Ltd / The Committee of Advertising Practice. September 2, 2015. Retrieved September 27, 2018.
  28. ^ "Forever Living Warned by ASA". Insider Media Ltd. September 1, 2015. Retrieved September 27, 2018.
  29. ^ Harrison-Dunn, Annie (June 14, 2016). "ASA puts maca claims to bed following Facebook fallout". Nutra Ingredients. Retrieved September 27, 2018.
  30. ^ "NOTICE OF VIOLATIONS OF PROPOSITION 65" (PDF).
  31. ^ "NOTICE OF VIOLATIONS OF CALIFORNIA HEALTH AND SAFETY CODE" (PDF).
  32. ^ "DENYING PLAINTIFFS MOTION TO STRIKE". webapps.sftc.org. Retrieved November 30, 2022.
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