SECTION 6: Network Marketing and the Law
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should
Know, Jeffrey Babener, Legaline Publications
MLM consultant practice tips. MLM Raiding
issues are a continuous challenge for MLM Companies. Many problems
may be avoided by appropriate MLM Legal language in MLM distributor
agreements and MLM Policies. Guidelines for activity during the MLM
distributorship and after the MLM distributorship are imperative.
MLM Legal and MLMLegal.com and Babener and Associates provides
expert MLM Consultant and MLM Consulting advise on MLM corporate, MLM
software, MLM Compensation, MLM Taxes, etc. MLM Consulting is an important
component for MLM startup. Careful Choice of MLM Software is another
component of MLM Corporate. An MLM Consultant and MLM Law and
MLM Legal is part of the MLM Startup Team. MLM Compensation must
be reviewed by an MLM Consulting standpoint by a MLM Consultant and
MLM Legal and MLM Law professional and programmed by a MLM Software
and MLM Technology provider.
The Pyramid Cases.
The network marketing industry was probably proceeding on a safe legal course until the pyramid promoters of the 1970s, particularly the Dare To Be Great program marketed by Glen W. Turner. Virtually every state had residents who were impacted by this and other programs which, officials argued, were mere headhunting schemes. This means that the sale of product was really unimportant to the marketing program. In these pyramids, the only commodity that was moved in the marketplace was money.
The FTC established the early guidelines regulating illegal pyramids and other "unlawful" entrepreneurial chains: In Koscot Interplanetary, Inc., (1975), the FTC was highly critical of large investments for membership fees, the requirement of front-end inventory loading, programs in which distributors were mislead as to the amount of commission they might reasonably earn, and the programs in which the only real product consumers were the distributors themselves.
The Securities and Exchange Commission (SEC) also stepped into the picture, showing that securities statutes may also apply to this industry. In SEC v. Glen W. Turner, Inc., (1973), the programs of Turner's Dare To Be Great were found to be "investment contracts" under the securities laws and thus regulated by the SEC. In that case, the U.S. Ninth Circuit Court of Appeals stated that the securities acts "were designed to protect the American public from speculative or fraudulent schemes of promoters."
These pyramid cases left a sour taste in the mouth
of the American public. It would seem that the decisions during the early
1970s represented a low point in the legal history of the MLM industry.
As a result of the activities of a few, the industry was penalized by
an overreaction of regulatory authorities. Virtually every state adopted
pyramid statutes and the industry also found itself affected by the application
of combinations of business opportunity statutes, franchise and security
statutes, state lottery and referral statutes as well as enforcement activity
by the U.S. Post Office through its lottery and fraud statutes. In addition,
several states went on to adopt multilevel distribution statutes which
were designed to regulate this industry.
DIRECT SALES consultant practice tips.
DIRECT SALES Companies should join DIRECT SALES Trade organizations. DIRECT SALES trade organizations provide educational assistance
to members and assert positive DIRECT SALES Industry positions on DIRECT
SALES Regulations and DIRECT SALES Laws. DIRECT SALES Legal and
MLMLegal.com and Babener and Associates provides expert DIRECT
SALES Consultant and DIRECT SALES Consulting advise on DIRECT SALES
corporate, DIRECT SALES software, DIRECT SALES Compensation, DIRECT
SALES Taxes, etc. DIRECT SALES Consulting is an important component
for DIRECT SALES startup. Careful Choice of DIRECT SALES Software
is another component of DIRECT SALES Corporate. An DIRECT SALES
Consultant and DIRECT SALES Law and DIRECT SALES Legal is part of the
DIRECT SALES Startup Team. DIRECT SALES Compensation must be reviewed
by an DIRECT SALES Consulting standpoint by an DIRECT SALES Consultant
and DIRECT SALES Legal and DIRECT SALES Law professional and programmed
by a DIRECT SALES Software and DIRECT SALES Technology provider.