Endorsements – MLM, Network Marketing, Direct Selling News, Videos, Articles, Legal Updates, and More. http://mlmlegal.com/MLMBlog From Multilevel Marketing Attorney and Business Consultant, Jeff Babener. Run, Learn & Get Lost at MLMLegal.com Sat, 07 Mar 2020 15:31:49 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.25 Do Celebrity Endorsements Result in Increased Marketing Results and Sales? Watch this New Video! http://mlmlegal.com/MLMBlog/do-celebrity-endorsements-result-in-increased-marketing-results-and-sales-watch-this-new-video/ Mon, 22 Apr 2019 16:04:17 +0000 http://mlmlegal.com/MLMBlog/?p=1398 This Video Explains Which Statement is True: Celebrity Endorsements Improve Marketing or Celebrity Endorsements are a Double-Edged Sword. In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the … Continue reading

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This Video Explains Which Statement is True: Celebrity Endorsements Improve Marketing or Celebrity Endorsements are a Double-Edged Sword.

In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the connection with the product or service, whether or not the celebrity is a user and whether or not the statements of the celebrity appear as truly authentic or merely a “pay for endorsement.”

The use of celebrity endorsement is far less successful in the direct selling industry. In fact, the advertising model for MLM is quite different than conventional advertising. In conventional distribution, such as retail stores, internet or broadcast media, companies pay advertising dollars and endorsement fees to promote the brand. However, in direct selling, the commissions and rewards paid to distributors are effectively the advertising dollars that would be paid in other channels of distribution. Instead, the branding, in direct selling, is accomplished by the promotion of the sales network of the direct selling company. Looking at the success of major companies such as Avon, Mary Kay, Tupperware, Herbalife, etc., the branding task has been accomplished by the distributor force, and generally without the use of celebrity advertising.

One final note on celebrity advertising is that the Federal Trade Commission (FTC) has adopted significant rules on endorsements and testimonials to require clear disclosure to consumers of relationships between endorsers and the advertising company. For a detailed discussion, see www.mlmlegal.com article on this subject:

FTC Guidelines on Endorsements and Testimonials Resource Center.

If you are interested in attending the Starting and Running the Successful MLM Companyconference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

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What Are Some Network Marketing Myths? http://mlmlegal.com/MLMBlog/what-are-some-network-marketing-myths/ Wed, 20 Jun 2018 20:43:34 +0000 http://mlmlegal.com/MLMBlog/?p=1291 We have all heard the following claims in the zeal of promotion and recruitment. Multi-level marketing (MLM) classes are taught at Harvard Business School. Network marketing has produced more millionaires than any other type of business. MLM will dominate the … Continue reading

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business womanWe have all heard the following claims in the zeal of promotion and recruitment.

  1. Multi-level marketing (MLM) classes are taught at Harvard Business School.
  2. Network marketing has produced more millionaires than any other type of business.
  3. MLM will dominate the economy in the 21st century.

Unfortunately, these statements are “urban” MLM myths that are over the top and damage the credibility of distributors and companies, as they promote the truly positive opportunities of direct selling.

  1. Historically, the Harvard statement preceded the actual teaching of MLM classes. A Harvard case study on a company such as Mary Kay, or a lecture by someone like Mary Kay, was twisted into the proposition that MLM was part of the curriculum. This assertion was not true, yet it was repeated over and over. Since that time, various universities such as University of Illinois at Chicago or Utah Valley State University and others have instituted courses. Many professors have joined the ranks of scholarly articles on direct selling. And so there is plenty to talk about without misrepresenting the facts.
  2. Let us address the myth of networking marketing producing the most millionaires compared to any other type of business. Of course, MLM has had its share of millionaires, and a few billionaires from such companies as Amway. They can be found on America’s wealth lists. It is a vast overstatement in a country with 300 million people, and where there are about 16 million distributors with statistics indicating that only 1-2% make enough money to amount to a full-time living, to have millionaire-expectations. In fact, the exaggeration has prompted the FTC and state Attorneys General to demand, and leading companies have acceded, to post average earnings disclosures which accurately show the experience of typical distributors in their program. Again, there is room to be proud of the opportunity and success of many, but overreaching earnings claims taints the potential recruitment pool.
  3. Will MLM dominate in the 21st century? The simple answer is: No. Keep in mind that U.S. MLM sales hover in the $30 billion range in an economy of that posts $17 trillion, i.e. about 1/5 of 1% of national revenue. MLM will play an important role, but, again, there is no useful purpose in being caught in an exaggeration.

For more information on any topic on network marketing that comes to mind, please visit www.mlmlegal.com and www.mlmattorney.com.

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

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Video – What should today’s MLM business owner look for in a legal advisor? http://mlmlegal.com/MLMBlog/video-what-should-todays-mlm-business-owner-look-for-in-a-legal-advisor/ Sat, 12 May 2018 16:15:03 +0000 http://mlmlegal.com/MLMBlog/?p=1284 With over 35 years in the industry, Jeff Babener has worked with companies like Amway, Avon, NuSkin, Usana, Melaleuca, and Nikken. Your legal advisor should be there for you 24/7. He’s worked with all kinds of startups, from budgets from … Continue reading

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With over 35 years in the industry, Jeff Babener has worked with companies like Amway, Avon, NuSkin, Usana, Melaleuca, and Nikken. Your legal advisor should be there for you 24/7. He’s worked with all kinds of startups, from budgets from $0 to millions of dollars. Experience is key when you’re looking to hire a MLM attorney.

 

For more information, visit www.mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

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PRWeb (PR) – MLMLegal.com Presents the E-Newsletter: MLM News Global – April 15, 2016 http://mlmlegal.com/MLMBlog/prweb-pr-mlmlegal-com-presents-e-newsletter-mlm-news-global-april-15-2016/ Tue, 19 Apr 2016 21:49:45 +0000 http://mlmlegal.com/MLMBlog/?p=1104 Welcome to the Newsletter: MLM News Global, an industry e-newsletter originating from one of the most trusted and respected direct selling websites, MLMLegal.com. Portland, Oregon (PRWEB)April 15, 2016 MLM News Global newsletter offers recent news, videos, company profiles, and timely … Continue reading

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Welcome to the Newsletter: MLM News Global, an industry e-newsletter originating from one of the most trusted and respected direct selling websites, MLMLegal.com.

MLM News Global newsletter offers recent news, videos, company profiles, and timely articles. The e-newsletter contains the top news stories from the network marketing industry, the most recent MLM scam alerts, timely articles on the direct selling industry, and so much more. Keep up-to-date on top MLM news headlines or to hear about the latest MLM scam alerts and pyramid scheme accusations. The timely headline reporting will keep subscribers up-to-date on stories that affect everyone in the network marketing industry. In addition, important press releases, directly from MLM/network marketing/direct selling, party plan companies, keep subscribers current on trends and direct selling company developments.

Subscribe and look forward to exclusive videos that laser-focus on industry-educational topics, such as distributor education, industry Q&A, direct selling executive interviews, MLM startup, and pyramid schemes.

The MLM News Global newsletter features industry-related articles in every issue, featuring MLMLegal.com’s perspective on FTC rulings, Burnlounge, Herbalife, Vemma cases, and more.

MLM News Global also highlights featured articles, from industry experts, on MLM industry-related topics, such as pyramid schemes, compensation plans, recruiting, lead generation, consulting, legal analysis, software, and more.

The MLM News Global Newsletter is presented by industry educator, MLM legal expert, and network marketing business consultant and lawyer, Attorney Jeff Babener.

Sign up today to receive valuable MLM, network marketing, direct selling content, an imperative to anyone in the direct selling industry.

Unsubscribe at any time. We guarantee a NO SPAM POLICY!

Check out our Archives for past issues.

The Starting and Running the Successful MLM Company conference will be held May 20, 2016.

How do you find out more information?

Visit the new website:

http://www.mlmlegal.com

Visit the blogs:

http://mlmlegal.com/MLMBlog/

http://mlmattorney.com/blog/

Contact MLMLegal.com: 503-226-6600 or 800-231-2162

Conference Information: The day will begin at 9:00AM and end at 5:30PM, then from 5:30PM-8:30PM there will be one-on-one time with the speakers. For more information visit our website or call 800-231-2162/503-226-6600. Registrations are taken exclusively by phone and questions are always welcome.

Presented by one of the most trusted individuals in direct selling and MLM, Jeffrey Babener, Editor of http://www.mlmlegal.com.
About Attorney Jeffrey Babener: Conference Host and Chairman, Editor of http://www.mlmlegal.com, as well as the leading direct selling attorney in the United States – With over 30 years of experience as a direct selling attorney, Jeffrey Babener has advised leading companies in the MLM/Direct Selling industry, ranging from Avon to Nikken, to Herbalife, to Melaleuca, to USANA, and to Excel Communications, Nerium International, plus many more. He has been published in national magazines such as Money, Inc., Atlantic Monthly, Entrepreneur magazine, Direct Selling News, Direct Sales Journal, Success magazine, Money Maker’s Monthly, among countless others. He’s authored several books, including his most popular Network Marketing: What you should know. Mr. Babener has chaired more than 70 national conferences on direct selling.

Learn how to receive two COMPLIMENTARY tickets to attend the next Starting and Running the Successful MLM Company Conference by visiting the MLMAttorney.com.

View the press release at PRWeb.

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Looking Forward to 2015 – 63 New Videos Being Launched at MLMLegal.com http://mlmlegal.com/MLMBlog/looking-forward-to-2015-63-new-videos-being-launched-at-mlmlegal-com/ Thu, 12 Mar 2015 20:41:43 +0000 http://mlmlegal.com/MLMBlog/?p=914 Teenage Mutant Ninja Turtles (depicted here in true Babener-fashion by Jeff Babener’s grandson, Sammy) are famous for battling petty criminals, evil overlords, mutated creatures, and alien invaders. MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing … Continue reading

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MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing industry, and distributing resources to anyone who visits our website.

MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing industry, and distributing resources to anyone who visits our website.

Teenage Mutant Ninja Turtles (depicted here in true Babener-fashion by Jeff Babener’s grandson, Sammy) are famous for battling petty criminals, evil overlords, mutated creatures, and alien invaders. MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing industry, and distributing resources to anyone who visits our website.

Every year MLMLegal.com adds a comprehensive project to its website. Whether it is videos on network marketing, well-researched articles, library of legal cases, or a video miniseries, each year our website is expanded upon. This year is no different.

In 2014, MLMLegal.com committed the highly-regarded article “BurnLounge Appeal Decision: Guidance on Pyramid v. Legitimate MLM and the Role of Personal Use in Pyramid Analysis” to the website.

In 2015, we plan to add 63 new videos to our website and Youtube Channel on the topic of MLM education. Below are some of the topics to be discussed by MLM Attorney Jeff Babener in this new video series:

  • What’s the Difference between MLM, Network Marketing, Party Plan and Direct Sales?
  • What Is a “Pay to Play?”
  • How Much Does It Cost to Start a MLM Company?
  • How Do I Raise Capital to Start My MLM Business?
  • What Is the Benefit of Recruiting Experienced Distributors?
  • What about Gifting Clubs?
  • Why Do I Need an Experienced Network Marketing Attorney?
  • What Do I Do with Distributors Who Go Passive (for MLM Executives)?
  • What Do I Do with Distributors Who Go Passive (for MLM Distributors)?
  • What Key Factors Determine the Growth of Network Marketing Companies?
  • Do You Have Some Tips for Generating Network Marketing Leads?
  • Do You Have Some Tips to Become a Successful Network Marketing Distributor?
  • Are There MLM Companies That Have Achieved Success on a Low Budget?
  • Since You Are a MLM Attorney, Why Would You Host the MLM Startup Conference for the Executives of Startup and Existing Companies?
  • If I’m a New Distributor Then Should I Focus My Selling In Areas Where Other Distributors Are Successful Or Should I Focus On Untouched Territory?
  • I Own a MLM Company. How Can I Determine Cost of Goods? In Other Words, How Do I Price My Products for Retail, Distributor and Direct-To-Consumer Sales?
  • Do I Need To Worry about Merchant Account Processing? Should I Have Just One Merchant Account?
  • If a Sales Kit or Startup Fee Is Several Hundred Dollars, Then Is This Considered “Frontloading”?
  • How Do I Create a Compensation Plan That Guarantees That I Am Legal?
  • I’m Starting a MLM Company. I Am Going to Have Distributors Earn Income by
    Referring Others, Is This Legal?
  • What Should I Look for When Hiring a Vice President of Marketing?
  • What Is the Typical Price of an at-Cost Starter Kit in the Industry?
  • Can I (as a MLM Executive) Pass the Costs of Website Development, Marketing Materials, Etc. Down to Distributors?
  • How Do I Find Top Distributors?
  • In an Absolute Nutshell, What Are the Two Main Causes of a MLM Company Failing?
  • As a Distributor, Can I Use Display Booths to Sell My Company’s Products? Is There a Limit on the Time I Can Spend Selling at a Booth?
  • In Regards to Event Sales, Such as Fairs, Kiosks, Vending Machines, Etc., Am I Authorized to Sell My Company’s Products at Such Events?
  • Why Do MLM Companies Require Distributors to Use Replicated Websites Rather Than Distributor-Created Websites?
  • What about Raising Capital to Start Your Network Marketing Company?
  • How Many People Would I Need in My Organization to Make Over $10,000?
  • Are Network Marketing Companies Mostly Moving to All-Digital/All-Online Starter Kits? Can It be Done in a Way That Ensures a High Perceived Value?
  • What Regulatory Changes Are Affecting Network Marketing Companies?
  • What Should I Look for in a Company When Choosing Back Office Software?
  • How Important Are Celebrity Endorsements? Do They Help Marketing or Is It a Double-Edged Sword?
  • How Often Should Companies Renew Their Policies and Procedures to Make Them Relevant in Today’s Marketplace?
  • Do You Want to Attract MLM Professionals or MLM Junkies into Your Direct Selling Company?
  • How Have Raiding Rules Evolved in Direct Selling Contracts and Policies and Procedures?
  • What Happens if Consultants Raid Anyway?
  • What Are the Most Important Things to Remember When You Host a Distributor Recognition Event?
  • Do Incentives Increase Sales? How Worthwhile Are Consultant Incentives?
  • What Do Startup Companies Think about Long Term Professional Relationships?
  • What Is the U.S. and International Trend in Recognizing the Validity of Personal Use by Distributors in Pyramid Cases?

So, keep your eyes on MLMLegal.com this year. We will have a lot of new content added to our website and we want you to be a part of it! Run, learn and get lost at MLMLegal.com!

For more information on any topic on network marketing that comes to mind, please visit www.mlmlegal.com and www.mlmattorney.com.

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

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Why do MLM Companies Require Distributors to Use Replicated Websites Rather than Distributor-Created Websites? http://mlmlegal.com/MLMBlog/why-do-mlm-companies-require-distributors-to-use-replicated-websites-rather-than-distributor-created-websites/ Tue, 01 Apr 2014 20:26:02 +0000 http://mlmlegal.com/MLMBlog/?p=811 Many companies require their consultants to use replicated websites because they are rightfully concerned about unauthorized medical and earnings claims as well as confusion in the search engines. Therefore, many leading companies provide authorized replicated websites to distributors and prohibit … Continue reading

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Consultants are given replicated websites by established companies.

Consultants are given replicated websites by established companies.

Many companies require their consultants to use replicated websites because they are rightfully concerned about unauthorized medical and earnings claims as well as confusion in the search engines. Therefore, many leading companies provide authorized replicated websites to distributors and prohibit individual-created websites.

There are three primary reasons for this, which include:
1. To avoid unauthorized medical and earnings claims
2. To assert control over the company’s trademark
3. And, to avoid distributor websites competing against the primary company website in a way that the company website gets lost or is displaced from the top of search results for the company or its products.

For more information on the network marketing industry visit www.mlmlegal.com and www.mlmattorney.com.

Find us on our social networks:

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LinkedIn

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Our next Starting and Running the Successful MLM Company Conference takes place May 15th & 16th, 2014 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register. If you’d like to see how you can get free tickets to the next MLM Startup Conference, visit our Innovation Campaign page.

Visit us at www.mlmlegal.com to learn more.

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CNBC.com Cites Legal Expert, Jeffrey Babener on FTC Business Opportunity Rule http://mlmlegal.com/MLMBlog/cnbc-com-cites-legal-expert-jeffrey-babener-on-ftc-business-opportunity-rule/ http://mlmlegal.com/MLMBlog/cnbc-com-cites-legal-expert-jeffrey-babener-on-ftc-business-opportunity-rule/#comments Fri, 18 Jan 2013 22:39:47 +0000 http://mlmlegal.com/MLMBlog/?p=338 CNBC Senior Stocks Commentator, Herb Greenberg, evoked the expertise of leading MLM attorney, Jeff Babener, in the Commentator’s blog post “How Multi-Level Marketers Dodged a Bullet.” CNBC – January 9, 2013 In his article, Commentator Greenberg discussed the effect lobbying … Continue reading

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CNBC Senior Stocks Commentator, Herb Greenberg, evoked the expertise of leading MLM attorney, Jeff Babener, in the Commentator’s blog post “How Multi-Level Marketers Dodged a Bullet.”

CNBC – January 9, 2013

In his article, Commentator Greenberg discussed the effect lobbying dollars spent by the Direct Selling Association (DSA) and Herbalife assisted in the exclusion of consultants from the Business Opportunity Rule, enacted by the Federal Trade Commission (FTC).

Attorney Babener’s (editor of www.mlmlegal.com and www.mlmattorney.com) widely read article titled “The New FTC Business Opportunity Rule – MLM/Direct Selling Exemption Recognized” was quoted saying:

In March 2012, the direct selling industry has occasion to celebrate what a united industry, companies and distributors, can achieve if everyone pulls oars together in the same direction. The fruits of their labor are apparent in a newly-forged, positive relationship with the primary federal agency that regulates a channel distribution…”

He added: “In its final FTC Business Opportunity Rule, the FTC stated its clear intention to relieve companies and distributors from what might have been very onerous conditions of recruitment that would have dramatically impaired the ability of distributors to build their businesses.

Jeff Babener’s positive impact on the direct selling industry is widespread. His comments on the proposed FTC Rule were cited several times in the FTC Staff Report, and his efforts, along with many others in the industry, contributed to the FTC decision to effectively exclude MLM, Direct Selling, and Network Marketing Companies, and their millions of distributors, from potentially onerous impact on the Direct Selling Industry.

See his comments to the FTC: FTC Proposed Business Opportunity Rule: MLMLegal.com Speaks Out.

To read more about the Proposed Business Opportunity Rule, visit the following links:

FTC Guidelines on Endorsements and Testimonials
FTC Guidelines Resource Center
FTC Guidelines Endorsements and Testimonials: Detailed Analysis
FTC News Release on Endorsements and Testimonials
FTC Complete Guidelines Release
FTC Short Version Guidelines Release
FTC Examples of Material Connection
FTC Regulation of Advertising

What is the Relationship between MLM and the FTC? Video

Make sure to visit our blogs for the latest information on the direct selling industry: MLMLegal Blog Home and MLM Attorney Blog Home

Find us on our social networks:

Google Plus: http://plus.google.com/u/0/115279960045099999909#115279960045099999909/posts

LinkedIn: http://www.linkedin.com/in/mlmlegal

Twitter: http://www.twitter.com/BabenerLawFirm

Myspace: http://www.myspace.com/mlmlegal

Facebook: http://www.facebook.com/profile.php?id=696968133

And, as always, visit MLMLegal.com, the best MLM resource on the web.

Next MLM Conference in Las Vegas is February 21 & 22, 2013! Call 800-231-2162 to register today!

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Why do companies restrict the type of advertising carried on by their distributors? http://mlmlegal.com/MLMBlog/why-do-companies-restrict-the-type-of-advertising-carried-on-by-their-distributors/ http://mlmlegal.com/MLMBlog/why-do-companies-restrict-the-type-of-advertising-carried-on-by-their-distributors/#comments Wed, 16 Jan 2013 20:47:57 +0000 http://mlmlegal.com/MLMBlog/?p=326 The question below is taken from one of Mr. Babener’s client’s distributors’ Q&A pamphlets: Q:  Why do companies restrict the type of advertising carried on by their distributors? A: Company rules regarding advertising are usually very detailed. Companies are zealous about … Continue reading

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The question below is taken from one of Mr. Babener’s client’s distributors’ Q&A pamphlets:

Q:  Why do companies restrict the type of advertising carried on by their distributors?

A: Company rules regarding advertising are usually very detailed. Companies are zealous about protecting their trademarks. In addition, they want to avoid inappropriate claims about earnings opportunities or product properties, such as medical claims. The rights of the distributor and the network marketing company are determined by their contract, and specific restrictions on advertising are contained in the distributor agreement and the company’s policies and procedures.

For additional information on advertising and the network marketing industry, visit the following links:

FTC Guidelines on Endorsements and Testimonials- Regulation of Advertising” Article

Chasing The Competition” Article

FTC Guidelines on Endorsements and Testimonials – Resource Center” Article

FTC – Regulation of Advertising” Article

FTC Endorsement Guidelines Impact MLM/Direct Selling Blog Post

MLM Startup – The Basics” MLM Corporate Startup Essentials

Comparative Guidelines for Advertising

What is the Relationship between MLM and the FTC?

Make sure to visit our blogs for the latest information on the direct selling industry: MLMLegal Blog Home and MLM Attorney Blog Home

Find us on our social networks:

Google Plus: http://plus.google.com/u/0/115279960045099999909#115279960045099999909/posts

LinkedIn: http://www.linkedin.com/in/mlmlegal

Twitter: http://www.twitter.com/BabenerLawFirm

Myspace: http://www.myspace.com/mlmlegal

Facebook: http://www.facebook.com/profile.php?id=696968133

And, as always, visit MLMLegal.com, the best MLM resource on the web.

Next MLM Conference in Las Vegas is February 21 & 22, 2013! Call 800-231-2162 to register today!

 

 

 

 

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D-Day: Direct Selling v. FTC http://mlmlegal.com/MLMBlog/d-day-direct-selling-v-ftc/ Tue, 26 Jun 2012 16:50:03 +0000 http://mlmlegal.com/MLMBlog/?p=147 A Resilient Industry Fights Back The assault was not on the beaches of Normandy, but nonetheless thousands of direct selling distributors and scores of direct selling companies scaled the cliffs of the FTC’s regulatory bunker to knock out the imminent … Continue reading

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A Resilient Industry Fights Back

The assault was not on the beaches of Normandy, but nonetheless thousands of direct selling distributors and scores of direct selling companies scaled the cliffs of the FTC’s regulatory bunker to knock out the imminent threat to the direct selling industry, the FTC Proposed Business Opportunity Rule. In July, 2006, the mail room and internet repository of the FTC was inundated with letters and comments of thousands of individuals and scores of leading companies, representing 14 million home based-businesses that contribute $30 billion to the U.S. economy.

Along side the charge were detailed commentaries by industry professionals and experts, as well as trade groups such as the Direct Selling Association and the Multilevel Marketing International Association. Their message to the bureaucracy: the proposed FTC rule, although well-intentioned to protect the American consumer, misses the mark and, in fact, through onerous regulations, may well significantly impair the likes of Mary Kay, Tupperware, Shaklee, Quixtar, NuSkin, National Companies, Primerica, Herbalife, and so many other contributors to small business opportunities in America.

Major companies did not mince their words in requesting the FTC to withdraw its proposal: Mary Kay, “impractical, unnecessary and burdensome compliance requirements which would devastate our 43 year old company”; Avon, “overly broad and unduly burdensome”; Primerica, “The proposed Rule, if adopted, would cripple many direct selling businesses and would impair the livelihoods of millions of Americans who work in the industry.”

The Issues in a Nutshell

An excerpt from formal comments of Babener and Associates, legal advisor to many of the companies in the direct selling industry, filed with the FTC, echoes industry opposition to the FTC Proposed Business Opportunity Rule:

  1. The underlying assumptions regarding the size and scope of the direct selling industry and the adverse impact on the industry are grossly underestimated in the FTC staff report on the proposed rule.
  1. Requiring prospective sales recruits to wait seven days after a recruitment presentation to join a direct selling company will stifle recruitment in an industry that depends on an orderly development of a sales organization. A better approach would be to allow a seven day right of rescission, paralleling the FTC Cooling Off Rule.
  1. Requiring direct sellers to provide information and identity of 10 sales associates, in close geographic proximity to a prospective salesperson, will be a logistical nightmare and a dramatic invasion of privacy of those whose information is shared. The proposed disclosure lays a foundation for identity theft and, in an industry where the majority of sales people are women, the disclosure of their identity information to “strangers” creates unwelcome opportunities for sexual predators.
  1. Requiring direct sellers to release any information regarding prior litigation, whether or not at fault, is not only onerous and unfair, but creates an unwarranted stigma for legitimate companies involved.
  1. In the course of crafting a separate business opportunity rule, elimination of the historical $500 expenditure threshold for triggering applicability of the FTC franchise rule is inconsistent with state business opportunity legislation, FTC franchise rules, and causes direct selling companies with minimal investments to be subjected to onerous record keeping and disclosure rules that will become a major inhibitor of small business, a major contributor to the U.S. economy. In fact, after a few decades, in light of inflation, the threshold should be raised, not lowered.  In reality, as is the case today, the frauds and cheats will not bother to comply with the proposed rule and the burden and damage of the new bureaucratic rules will be borne by legitimate businesses.
  1. If the goal is to attack sleazy “fly by night” marketers of false and deceptive direct selling practices, a long line of FTC enforcement actions demonstrates that the FTC has the current authority, mandate and capability to attack fraudulent and deceptive practices.

What Next?  We will fight on the beaches…

The industry was forcefully heard in the thousands of well-articulated formal comments to the FTC. Congressional delegations have been briefed by industry representatives. A hearing and/or workshop process is projected to last 18 months to three years. The industry has called out “big guns.”  The most recently retired chairman of the FTC has been engaged by Primerica to lead a battle to convince the FTC staff to withdraw its proposed rule or dramatically modify the proposal to respond to industry needs. Industry experts, associations and professionals will dialog with the FTC staff. Industry associations, such as the DSA, have placed this issue as their number one priority. Industry representatives are extremely well prepared for any adversarial hearing process. Companies and trade associations are geared to challenge in court the legality and overreach of the proposed rule.

Obviously, no one can predict the outcome, but knowledgeable industry experts are optimistic that the end result will be quite workable for the industry. If all else fails, in a similar fashion to the health products industry response perceived overreaching by the FDA, which resulted in Congressional protection under DSHEA, the Dietary Supplement Health Education Act, the direct selling industry, through its companies, sales forces, lobbyists and numerous Congressional allies, will be prepared for “nuclear option,” remedial federal legislation in the event of the adoption of an unsatisfactory rule by the FTC. Although not beyond the realm of possibility, the FTC may withdraw its proposed rule or amend it before proceeding further. More likely, however, a combative process will occur during the near term. Until, and unless there is a modification in the existing rule, distributors and companies should clearly understand that “nothing has changed” that will affect their business.  A modest prediction: “things will work out okay in the end, but it will be a long process, perhaps years.”

PS. Although the formal comment period is over, individuals who wish to file comments with the FTC may still do so.  In fact, continued expression of concern by interested individuals cannot help but be heard by the staff at the FTC. FTC internet contact information can be found at www.ftc.gov.  The industry and the FTC are not enemies.  They both seek consumer protection, but the direct selling industry objects to unnecessary overregulation that can destroy an important channel of distribution.  Please follow ongoing updates and discussions on the status of the FTC Proposed Business Opportunity Rule at www.mlmlegal.com.

Visit these pages for the latest information on the direct selling industry and the FTC:

FTC v. BurnLounge: Lessons Learned for MLM/Direct Selling

FTC Guidelines on Endorsements and Testimonials
FTC Guidelines Resource Center
FTC Guidelines Endorsements and Testimonials: Detailed Analysis
FTC News Release on Endorsements and Testimonials
FTC Complete Guidelines Release
FTC Short Version Guidelines Release
FTC Examples of Material Connection
FTC Regulation of Advertising

FTC Proposed Business Opportunity Rule: Analysis and Updates:
The FTC Final Business Opportunity Rule: Still Work to Do
FTC Exemption Draft Falls Short … MLMLegal.com and DSA Suggest Revisions
FTC Exempts MLM from Proposed Business Opportunity Rule
DSA Position on FTC MLM Exemption Proposed Business Opportunity Rule
Analysis and Industry Response
Actual Text of Proposed Rule
FTC Speaks Out
DSA Speaks Out
DSWA Speaks Out
MLMIA Speaks Out
DRA Speaks Out
MLMLegal.Com Speaks Out

Or, watch the video: What is the Relationship between MLM and the FTC?

Visit us at www.mlmlegal.com to learn more.

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What do I do if my Company has heard from the FTC about Product Claims? http://mlmlegal.com/MLMBlog/what-do-i-do-if-my-company-has-heard-from-the-ftc-about-product-claims/ Tue, 15 May 2012 17:17:52 +0000 http://mlmlegal.com/MLMBlog/?p=60 Long ago, the federal government passed the FTC Act. The intention of the Act was to prevent deceptive practices in the marketing of products and services. The basic legislation was fairly straight forward and broad in its language. Since then, … Continue reading

Visit us at www.mlmlegal.com to learn more.

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Long ago, the federal government passed the FTC Act. The intention of the Act was to prevent deceptive practices in the marketing of products and services. The basic legislation was fairly straight forward and broad in its language.

Since then, the FTC has policed the commercial marketplace to examine claims about products made by marketers.  It makes no difference whether the claim is that you will make money in real estate, a potion you put hair in your hair, lose weight with an herbal supplement, or that you will save money on your gas bill. In all of these situations, the FTC examines whether or not a marketing practice and claim is supported by impartial substantiation and evidence.

If the FTC believes that support is lacking, it will request that the marketer modify its claims or make proper disclosures to explain what the typical consumer should expect of a product or service. The outcome of a matter may be resolved by a letter of assurance, by a consent agreement or by a consent settlement and judgment. If the FTC’s position is disputed, the FTC may even file suit in a federal court to enforce its position.

The bottom line is that an inquiry from the FTC is not to be taken lightly. Better yet, an MLM company should make sure that its product claims have adequate substantiation and evidence behind them and at least have sufficient evidence to avoid a knock on the door by the FTC.

For more information about the FTC’s guidelines visit mlmlegal.com’s FTC Guidelines on Endorsements and Testimonials Resource Center page.

The article “FTC Guidelines on Endorsements and Testimonials: Regulation of Advertising” may also prove helpful.

Or, watch the video What is the Relationship between MLM and the FTC?

Visit us at www.mlmlegal.com to learn more.

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