Avon Products, Inc. (AVP) Accused of Inflating Revenue and Growth

According to the complaint against the company for alleged violations of the Securities and Exchange Act of 1934 between August 2, 2016 and August 2, 2017, Avon Products, Inc. (AVP) loosened its credit terms to recruit new representatives and to boost revenue in Brazil, its largest market. While telling investors that the company continued to take "a balanced risk-based approach to bring in and on board new representatives," Avon failed to mention the changes to its credit terms and failed to increase its allowance for bad debts. The company began to report dismal financials only three months later on November 3, 2016, revealing that operating expenses had increased due to bad debt expense. Things continued to go south until August 3, 2017, when Avon announced that revenue was down 2% in constant dollars and that the company did not expect to see improvements in Brazil's performance that quarter. Since Avon's troubles began to be made public, Avon's stock plummeted, closing at only $2.87 per share on August 4, 2017, and it continues to trade significantly below the stock's class period high.

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