Herbalife – MLM, Network Marketing, Direct Selling News, Videos, Articles, Legal Updates, and More.

Carl Icahn says he made $1 billion on winning Herbalife trade against Ackman

Charity — Mon, 20 Aug 2018 15:31:49 +0000

Legendary investor Carl Icahn: I thought Ackman would get out of Herbalife sooner 1:32 PM ET Thu, 1 March 2018 | 03:24

Five years after his on-air verbal brawl with Pershing Square’s Bill Ackman over Herbalife, Carl Icahn said he made a billion dollars from his investment in the nutritional supplement maker.

“I enjoy a good fight, especially when I win it,” Icahn said Thursday on CNBC’s “Halftime Report.” “On paper, I made a billion.”

Icahn said his relationship with Ackman is friendly.

“I honestly, in a strange way, I thank Bill … I wish him well,” he said. “He called me up yesterday and congratulated me.”

The billionaire investor added he has not sold a single Herbalife share.

“Herbalife management did an incredible job through this. It was a major distraction for Herbalife,” he said. “I think Herbalife is a great company, makes great products.”

Read the full article.

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How to Fund your MLM Startup Company – New Video

Charity — Tue, 06 Oct 2015 21:15:53 +0000

Raising capital to fund your network marketing startup company can be tricky. In fact, there is no clear-cut answer to finding funding. However, there are options available to MLM company owners. There are several giant direct sales companies operating today that began with a very limited budget, just like you: in their basements, bathtubs, garages, and space bedrooms. Many of these companies grew organically to the huge size that they are now. You, however, may be in a different situation, where an influx of capital is absolutely necessary to keep your business afloat.

This article will help to provide you with details about how you can get free and trusted information about how to fund your MLM business. Experts generally suggest that it costs around $100-$200 thousand to start up a direct selling company. This article will provide you with some ideas as to where to find startup funding and links to information online, written by experienced MLM industry experts who’ve been asked thousands of times, “Where can I find funding to start and grow my MLM business?”

Here are three of the most common options MLM business owners consider when they are looking to fund their network marketing startup:

1) Do you have a substantial recruiting background? If you are a seasoned recruiter and are able to attract a strong line of consultants then your need for capital will decrease considerably. Expert MLM Attorney Jeff Babener always says, “Your need for capital is in direct inverse proportion to your ability to recruit.” If you are able to attract a strong sales force then your need to raise capital outside of the company may greatly diminish. Consultants will be the key to your success. If you are not a seasoned recruiter, then you may want to consider hiring someone who does have recruiting experience.

2) Do you have personal capital? MLM startups often find the capital that they need in their own bank accounts, or the bank accounts of family and friends (often referred to as your ‘warm market’). In some cases, an angel investor will be willing to invest in the company (a wealthy uncle, perhaps?). These sorts of investments are based primarily on the personal relationship, as well as trust and loyalty.

3) What about public financing? Unfortunately, not many venture capital firms are interested in investing in startup network marketing companies. The startup MLM company has the tendency to be run by inexperienced business owners needing only a few hundred thousand dollars, which isn’t very attractive to large investors. In nearly all cases, investment into the company will come from a close source. Once your business is worth millions, then the investment firms will take notice. You can read about some of the most famous MLM success stories on these pages: Silpada, Herbalife, Pampered Chef, and Visalus.

Another great place to get information on raising capital for your business is at the Starting and Running the Successful MLM Company Conference where industry experts will provide you with individual, one-on-one time and attention. Each speaker will sit with you and discuss your personal situation and specific needs. The easiest was for you to attend the conference on a budget is to visit the page of our Innovation Campaign. The October 2015 Innovation Campaign offers network marketing company owners the ability to receive two free tickets to the next Starting and Running the Successful MLM Company Conference in Las Vegas (a $345.00 value!). All you have to do is fill out a brief survey at our sister website: www.mlmattorney.com, and we will contact you right away to confirm your free tickets to the event! Attending this event will give you direct access to several MLM industry experts, including capitalization experts and MLM legal expert, Jeff Babener. Visit our Innovation Campaign page for complete information about the conference, including the topics that will be covered, the speaker/expert list, videos, and much more. For additional questions call 800-231-2162.

It won’t be easy raising capital to fund your MLM startup, but we hope that we’ve given you some ideas on where to start. We also hope that you better understand that it is possible to start small and make it big in this industry. For more information on raising capital visit www.mlmlegal.com and www.mlmattorney.com.

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 22 and 23, 2015 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.

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New Newsletter – August 18, 2015 – Headline News, Video of the Week, Articles, Scam Alerts – Sign up Today!

Charity — Tue, 18 Aug 2015 20:18:35 +0000

The MLM News Global E-Newsletter offers top MLM news, recent scams, videos, company profiles, and timely articles delivered to your inbox on a bi-monthly basis.

The MLM News Global E-Newsletter offers top MLM news, recent scams, videos, company profiles, and timely articles delivered to your inbox on a bi-monthly basis. The e-newsletter contains top news stories in the network marketing industry, the most recent MLM scam alerts, timely articles on the direct selling industry, and so much more. Make sure that you’re not the last to know about top MLM news stories, or to hear about the latest MLM scam reports. Our timely headline reporting will keep you 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, will keep you current on trends and direct selling company developments in the industry.

New Newsletter – Headline News, Video of the Week, Articles, Scam Alerts – Sign up Today!

Charity — Fri, 19 Jun 2015 16:48:51 +0000

MLMLegal.com’s MLM News Global newsletter offers top news stories, video highlights, weekly company profile, and network marketing articles of the week delivered to your inbox on a timely basis. Each newsletter contains MLM headline news stories in the network marketing industry, the top MLM scam alerts, timely educational articles direct selling, and so much more.

Make sure you’re not the last to hear about top headlines in the industry, or to hear about the latest company scam alerts. Our timely news reporting will keep you up-to-date on stories that affect everyone in the multilevel marketing industry.

We will also make sure you receive a “Video of the Week” on industry educational topics, such as legal issues, technology and software, common questions (FAQ), success stories, and MLM startup issues.

Each newsletter features the profile of a direct selling company, like Tupperware, Herbalife, and Mary Kay, or perhaps a startup multilevel marketing company that you haven’t heard about yet! MLM News Global also highlights two featured articles on industry-related topics, such as pyramid schemes, compensation plans, recruiting, lead generation, legal analysis, software, and more.

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

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MLMLegal.com On The Go – MLMLegal.com on iTunes

Charity — Tue, 11 Mar 2014 20:29:49 +0000

What do you do when you need answers on the go? MLM Legal now offers a free iTunes application.

MLMLegal.com is one of the most informative and reliable websites about network marketing on the web. MLM Legal provides educational articles answering common industry questions, such as:

– How to start a network marketing company

– An inside look at a MLM trial

– Herbalife and personal use

– How to identify a pyramid scheme

– How to analyze compensation plans

– And, many more.

MLM Legal offers over 70 videos where MLM expert Jeff Babener discusses network marketing for both consultants and company owners. The website offers research assistance by providing over 700 MLM company profiles, a vendor and supplier directory, and the latest industry news. MLM Legal also offers free materials to those who qualify, including a free MLM Startup Manual, an insightful DVD, and newsletters.

MLM Legal is free and open to anyone, anytime. However, what do you do when you need answers on the go? MLM Legal now offers a free iTunes application. This application offers up-to-date information on the direct selling industry, news and headlines, frequently asked questions, MLM law in 50 states, hundreds of articles, notorious MLM cases, as well as legal news and articles written by Jeff Babener.

MLMLegal on iTunes is free and will provide you with valuable information on the go. Download the free iTunes app HERE.

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Press Release: MLMLegal.com Releases Trilogy of Articles on Personal Use: Herbalife Belgium; Herbalife and Short Sellers; Burnlounge Music Portal

Charity — Tue, 07 Jan 2014 19:14:43 +0000

Next MLM Startup Conference takes place February 27 & 28, 2014 in Las Vegas.

Herbalife Belgium:

In a dramatic turn, a Belgian appeals courts reverses a lower court ruling and hold that Hebalife is no pyramid, but is in fact a legitimate direct selling business opportunity. The court validates “personal use” by distributors in pyramid analysis.

Herbalife: Belgian Appeal Court: Herbalife is No Pyramid, Validates Legitimacy – The Next Chapter in Personal Use

Herbalife: What the Short Sellers Missed:

This article tracks major regulatory actions over two decades to suggest that short sellers reliance on criticism of “personal use” may be misplaced.

Herbalife: What Short Sellers Missed on the Way to the Press Conference…

BurnLounge: Personal Use Recognized

In this case, a federal court expresses validity to distributor personal use, but rejects purchases of packages and sales tools where the predominant reason for purchase is merely to qualify for recruiting commissions in the opportunity.

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

Editor and direct selling attorney, Jeff Babener of Babener & Associates, discusses these issues in his trilogy of articles on personal use and network marketing.

The pivotal issue of “personal use” will be thoroughly covered in the next Starting and Running the Successful MLM Company Conference taking place February 2014.

The conference will be held February 27th & 28th, 2014, which is quickly approaching!

For more than 26 years, leading industry experts have educated the executives of starting and existing MLM, direct selling, network marketing, and party plan companies on how to structure their compensation plans, legalize their companies, recruit key employees and top-ranking distributors, develop business models, generate leads, fund their business, establish their website and technology platforms, better understand the direct selling industry, and so much more.

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Over the course of two days, attendees will hear from scores of industry experts, and if they choose, can sign up to meet with the speakers for individual one-on-one time. A full list of speakers and their biographies/credentials can be found at http://www.mlmlegal.com/bio.html .

The educational information gained by attending this event is invaluable. Here are just a few of the testimonials from past attendees:

“We have a traditional business at the moment and we are looking to take it into the realm where it’s more personalized, it’s more about building people and an experience. It has been absolutely worth our trip. We are looking to take our business to the next level and build relationships.”

“The reason I came to the show was to learn more about how to launch my direct sales company. I’m very comfortable and accustomed to selling through more traditional networks; however, I believe that the product that I’m launching is more suitable for direct sales; to get direct-to-consumer faster and in greater sales.”

“[I’ve] been in network marking for 30 years [but] we are learning a lot of things about how to launch, how to reach the people we need to have, and again, the things that are required to make a successful company, not only for us but especially for our customers and for our affiliates.”

Each attendee will receive a FREE copy of the Starting and Running the Successful MLM Company Manual .

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MLMlegal Releases New Film on MLM Startup Conference – Produced by Networkingstar.com

The MLM Startup Conference in Las Vegas

MLM Startup Conference – A Must for Executives of Startup and Existing MLM Companies

Contact Us : REGISTER TODAY! 503-226-6600 or 800-231-2162

The next MLM conference will be held February 2014 in Las Vegas (keep a look out for the May and October conferences as well). Each day will begin at 9:00AM and end at 4:00PM, when the one-on-time will begin and end around 7:00PM. For more information visit: http://www.mlmlegal.com/srs2.html or call 800-231-2162/503-226-6600. Registrations are taken by phone and questions are always welcome.

Visit our website to find out how to receive two free tickets to the event by participating in our February 2014 Innovation Campaign : http://www.mlmattorney.com/innovationcampaign.html .

Presented by one of the most trusted individuals in direct selling and MLM, Jeffrey Babener, Editor of www.mlmlegal.com .

About Attorney Jeffrey Babener : Conference Host and Chairman, Editor of www.mlmlegal.com , as well as the leading direct selling attorney in the United States – With over 25 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, plus many more. He’s 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 64 national conferences on direct selling.

Contact: Babener & Associates/MLMLegal.com
Telephone: 503-226-6600/800-231-2162
http://www.mlmlegal.com

View the Press Release HERE.

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Herbalife: Belgian Appeal Court: Herbalife is No Pyramid: Validates Legitimacy The Next Chapter in Recognition of Personal Use

Charity — Fri, 20 Dec 2013 23:05:37 +0000

By Jeffrey A. Babener

http://www.mlmlegal.com

Like the pine trees lining the winding road, I got a name… Jim Croce

And That Name Is Not “Pyramid”

So says a Belgian Appeal Court about American direct selling/network marketing company, Herbalife, a company with thousands of distributors in more than 80 countries.

In a ruling, December 2, 2013, the Court of Appeal in Brussels, came down like a sledge hammer on a lower court ruling of November, 2011 by the Brussels Commercial Court.** (Test-Aankoop v. Herbalife International Belgium NV, A.R. 2004/7787). The Appeal Court categorically reversed a lower court finding that Herbalife was a pyramid. To the contrary, it found the company to be in compliance with Belgian law and non-binding guidance that it referenced from the European Directive on direct selling.

**See a translated copy of the actual Belgian Court of Appeal Herbalife ruling.

Although a European court ruling, the core issue of “recognition of validity of personal use by direct selling distributors” has dominated discussion about the legitimacy of direct selling companies in the U.S. and internationally for two decades, and the import of this case and its discussion cannot be underestimated in its potential impact on future U.S. and international cases which distinguish legitimate direct selling from pyramid schemes.

The Belgian Lawsuit and the Lower Court Ruling

Based on a lawsuit brought by a nonprofit group, Test-Aankoop, in 2004, the lower court held Herbalife to be violative of Belgian law prohibiting pyramid schemes, the WMPC, the Belgian Law on Unfair Commercial Practices. The applicable pyramid law, as described by the Belgian Court of Appeal is as follows:

Article 91, 14° of the WMPC (Law of April 6, 2010, on market practices and consumer protection) provides that under all circumstances the following commercial practice shall be regarded as unfair:

establishing, managing or promoting a pyramid scheme in which a consumer or an enterprise, after payment, is likely to receive a compensation that is derived primarily from the introduction of new consumers in the scheme rather than from the sale or consumption of products.

Herbalife argued that many downline distributors joined Herbalife to purchase product for personal use and, therefore, were end consumers. However, the lower court rejected that purchases by Herbalife downline distributors for personal use should be recognized as sales to end consumers, opining that they were really just merchants purchasing within the sales force system, and therefore Herbalife violated Belgian law and was a pyramid.

Rejecting that distributor purchases could constitute sales to end consumers, the lower court dismissed the Herbalife explanation of its system:

Contrary to what Herbalife contends, it has not been proven that the distributors sell to end consumers.

And that was the end of the story… at least for the lower court.

The Belgian Appeal Court: Herbalife Is Not a Pyramid

After a two-year appeal period, the Belgian Court of Appeal ruled that the lower court had it “all wrong.” The Appeal Court ruling was unequivocal and unambiguous that Herbalife is a legitimate direct selling/network marketing/multilevel marketing business and that it is not a pyramid.

At the core of the decision was the Court of Appeal’s recognition of the legitimacy of personal use by distributors as a legitimate destination for product and basis for payment of direct sales commissions and indirect or override commissions on purchases by downline distributors.

A fundamental finding by the Court of Appeal was that commissions were, in fact, paid on product destined for end consumers, even if some of those consumers were distributors themselves. And the Court found that product, which was not sold to customers or used, was subject to return or buyback and that Herbalife adopted a clawback or reversal of commissions on returned product to make sure commissions were not paid on product that was not sold to customers or used by distributors. In other words, all product was accounted for, either as resold to customers, used for personal use or returned to the company, subject to a “clawback” of commissions.

As a result, the Court of Appeal held that the lower court was wrong in holding that commissions were not paid on sale or consumption of product. At several points in its decision, the Belgian Appeal Court reiterated multiple times its finding that “personal use” of product by distributors is a legitimate destination for product and payment of commissions:

The law requires therefore that it is not a question of own sales, so that the circumstance that the compensation is obtained on the grounds of the sale of products by other participants in the network, namely ‘downline’ distributors, does not form any infringement of the legal provision.

Nor does the law stipulate that the compensation may be obtained only from sales to a consumer who is not a distributor.

As far as use is concerned, finally, the law does not stipulate that it is a question of the use by a non-distributor.

Under such circumstances it cannot be argued that the system of the appellant makes it possible that her products wander about endlessly and never find their way to the consumer. All products that are bought by a distributor from the appellant, are either resold to a consumer, or are used by himself, or are returned by him to the appellant.

A distributor who sponsors may also obtain indirect profit from the sales or from own use of these products by means of his/her ‘downline.’ Also this indirect profit, which is subject to a quid pro quo, must be considered a compensation that comes from the sale or use of products as referred to in Articles 91, 14° and 99 of the WMPC. The obtaining of this compensation and therefore the possibility to obtain this form of indirect profit does not therefore indicate the existence of the forbidden pyramid system.

Consequently, it cannot therefore be claimed that it is a question of the forbidden pyramid sales for the reason that the distributor could obtain additional profit from the indirect distribution of profit, ‘royalty overrides’ and production bonuses, calculated on the sale of products by the distributors ranked below him/her in the network, rather than from the direct sales to consumers. As such, it is not forbidden for a distributor to aim for a network that is as broad as possible of ‘downliners’ in order to make as much profit as possible, as long as he/she is compensated on the basis of the purchase of products for selling on or for own use and not merely on the basis of the recruitment of new distributors.

From all previous determinations and considerations, it follows that it has not been shown that the sales system employed by the appellant can be considered as a system whereby the consumer/an enterprise, by means of a payment, receives a chance to a compensation which mainly flows from the establishment of new consumers/new enterprises in the system, than from the sale or consumption of products.

In conclusion, no infringement is shown to article 91, 14°, nor to article 99 of the WMPC.

Some Other Applause by the Court of Appeals for the Herbalife Business

Although the holding on “recognition of personal use” is at the core of the Belgian Appeal Court decision, the Court went on to note several salutary observations of Herbalife’s business:

From market research, which the appellant has carried out in August 2012 in Belgium, it showed that only 8% of the consumers of Herbalife were also distributors thereof. This shows that these products most definitely are being sold to ordinary consumers and are not only bought and sold within the system, and contradicts that they wander around endlessly within the system.

According to the figures communicated by Appellant, that are not contested, 85% of the distributors decide not to sponsor and opt therefore to sell the products directly to third parties or use them themselves.

From the aforementioned market study, it also shows that more than 50% of the respondents have already heard about the brand name Herbalife, and that 87% of the respondent have not bought any Herbalife products and that 88% of those who have already used the products, are of the intention to keep buying and using these products. Furthermore it concerns products that are used on a regular basis and not goods that are bought only once. As a result, as the number of buyers of these products increases, the demand for additional products will also increase.

The Court also noted that Herbalife has adopted and implemented the famous “Amway” consumer safeguard rules for its Supervisor-level distributors, which have been recognized over three decades of court cases, offering a buyback of product from terminating distributors, and providing a condition for receipt of commissions that those Supervisor-level distributors sell at least 70% of purchased product and have made monthly sales to each of ten customers.

The Court pointed out avoidance of an inventory loading incentive by implementing a “clawback” of upline commissions for returned product.

The opinion observed the offering of an entry level business kit and ongoing administrative fees that are commercially justified in price by the value provided, such that the payments are not to be viewed as “fees” for the right to recruit.

It noted that distributors are not mandated to buy product on an ongoing basis.

In addition the Court remarked on the lack of complaints: “Moreover, the respondent fails to submit any kind of documentation from which it would show that a Belgian distributor has filed a complaint about the alleged fact that he was being stuck with too largean inventory of products.”

The Next Chapter in Personal Use

The issue of recognition of distributor personal use, and its impact on legitimacy, has ebbed and flowed for two decades, since the 1990’s.

In fact, the Belgian lower court’s rejection of personal use and its decision that Herbalife was a pyramid, was an evidentiary poster child for hedge fund short sale critics who claimed, in 2012, that Herbalife stock was destined to be valueless. Obviously, the Appeal Court decision might require some rethinking on this point.

The Belgian Appeal Court decision seems to continue a legal trend toward recognition of personal use in legal cases which differentiate legitimate direct selling from pyramid schemes. The original precedent discussion of “end user” in pyramid cases dates to a 1975 FTC ruling involving a cosmetics company named Koscot, where it appeared that distributors were loaded with inventory and taught to find other distributors to do the same. In re Koscot Interplanetary Inc, 86 F.T.C. 1106 (1975). The program was held to be a pyramid. The Koscot analysis test for pyramid schemes (which is not that significantly different than the Belgian law in the Herbalife case) is that pyramid schemes: “are characterized by the payment by participants of money to the company in return for which they receive (1) the right to sell a product and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to sale of the product to ultimate users.”

A cloud over the direct selling industry appeared when a gratuitous statement in a 1996 Ninth Circuit U.S. Court of Appeals decision, Webster v. Omnitrition, 79 F.3d 776, called into question whether sales to distributors should fulfill the Koscot standard of sales to ultimate users, i.e., perhaps only sales to non-distributor retail customers should count, as opposed to personal use by distributors.

Industry observers observed that the Omnitrition comment should not be accorded “weight” as the statement was “dicta” (unnecessary to reach the decision) and that the case was really about whether or not Omnitrition implemented safeguards to avoid “inventory loading” which were so clear that a trial would be necessary to determine Omnitrition was not a pyramid. (In reality, the decision did not involve a review of the merits of a trial court decision, but rather an appeal of a summary judgment in favor of Omnitrition.) Nevertheless, the language in Omnitrition created confusion in enforcement, in cases and in discussions by the legal and financial press. On various occasions and in various cases, the FTC argued that “personal use” should be excluded in a pyramid analysis, and that only sales outside the sales network should be considered, for purposes of pyramid vs. legitimate.

To address this confusion, more than a dozen states amended pyramid legislation to recognize the validity of personal use as an end destination of product. And the FTC issued a 2004 Advisory Opinion which accepted personal use in direct selling companies:

Internal Consumption

Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme, The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.

It is important to distinguish an illegal pyramid scheme from a legitimate buyers club. A buyers club confers the right to purchase goods and services at a discount. If a buyers club is organized as a multi-level reward system, the purchase of goods and services by one’s downline could defray the cost of one’s own purchases (i.e., the greater the downline purchases, the greater the volume discounts that the club receives from its suppliers, the greater the discount that can be apportioned to participants through the multi-level system). The purchase of goods and services within such a system can, therefore, be distinguished from a pyramid scheme on two grounds. First, purchases by the club’s members can actually reduce costs for everyone (the goal of the club in the first place). Second, the purchase of goods and services is not merely incidental to the right to participate in a money-making venture, but rather the very reason participants join the program. Therefore, the plan does not simply transfer money from winners to losers, leaving the majority of participants with financial losses.

Notwithstanding this clarification, and court reasoning in opinions in several subsequent cases (WholeLiving, BurnLounge) the FTC, from time to time, offered inconsistent positions about personal use in briefs and proposed judgment orders. So, some real confusion continues. And this confusion, in addition to the Belgian lower court decision, was exploited by short seller hedge funds in their criticism of the direct selling industry.

The industry continues to look for clarity both in court cases and even possible remedial legislation along the lines of legislation adopted by many states. For this reason, every court case becomes important. And for this reason, the unambiguous statements of the Belgian Court of Appeal in the Herbalife case, cannot be underestimated.

Although the Koscot test (sales to the ultimate user) and the Belgian Court of Appeal analysis of its statute (product does not wander endlessly in the distributor system, but, in fact makes its way to the consumer) are not necessarily identical, the issues explored are so strikingly similar that the Belgian case will likely be cited as precedent in U.S cases on the subject of recognition of the role of personal use in pyramid analysis.

In fact, the discussion here appears to come full circle to the original analysis in the 1979 famous landmark Amway case. Amway has traditionally recognized personal use of product for commission purposes and the FTC Amway decision specifically recognized what it meant by sales to the “ultimate user” in terms similar to the Belgian court’s reference to the “end consumer”:

“….This multilevel wholesaling network ends with those distributors who have not sponsored any new distributors, and who make purchases from their sponsors solely for their own use or for resale to consumers…….(emphasis added)

…..Specifically, the Amway Plan is not a plan where participants purchase the right to earn profits by recruiting other participants, who themselves are interested in recruitment fees rather than the sale of products.”
The Potential Impact of the Belgian Herbalife Decision May be Very Significant.

In fact, the Herbalife Belgian Court of Appeal’s Ruling may well represent the next chapter in the court decisions on the issue of the validity of recognizing personal use as an end destination for product and for the basis of commissions for direct selling companies.

The Belgian Court will undoubtedly be cited in future court cases in Europe in that the Belgian law is pursuant to the European Directive’s definition of a pyramid scheme; that directive calls for full harmonization under which every country in the EU is required to adopt the same terminology. As a result, this decision will be precedent throughout the EU as to how these statutes, in each member country, should be applied.

In addition, the decision will likely be cited in U.S. cases where a central issue continues to be recognition of personal use by the sales force. It will also likely be recognized as probative by regulatory enforcement agencies and legislative bodies as the issue of pyramiding is addressed. And, of course, it will be cited in the financial press on the issue of the legitimacy of the direct selling industry model, a discussion that involves billions of dollars by investors in publicly traded direct selling companies.

For more information on this subject and other important issues in the area of MLM, Direct Selling and Network Marketing, please visit http://www.mlmlegal.com.

Jeffrey A. Babener, of Portland, Oregon, is the principal attorney in the law firm of Babener & Associates. For more than 25 years, he has advised leading U.S. and foreign companies in the direct selling industry, including many members of the Direct Selling Association. He has served as legal advisor to various NYSE direct selling companies, including Avon, Herbalife, USANA, NuSkin, etc. He has lectured and published extensively on direct selling and many of his writings will be found at http://www.mlmlegal.com, of which he is Editor. He is a graduate of the University of Southern California Law School, where he was an editor of the USC Law Review. Post USC Law, he served a one-year term appointment as a law clerk to Hon. David W. Williams, U.S. District Court, Central District of California. Mr. Babener is an active member of the State Bars of California and Oregon.

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Herbalife Releases Statement Regarding Results of Belgian Court Ruling

Charity — Tue, 03 Dec 2013 21:18:33 +0000

Herbalife was established in 1980 and operates in over 75 countries.

A lower court ruling that had previously claimed that the international nutritional company, Herbalife, was operating as a pyramid scheme was overturned December 3, 2013. An appellate court declared that Herbalife was in fact operating in complete compliance with Belgian law. This ruling is in response to the previous claims by the consumer organization, Test-Aankoop that Herbalife was operating as an illegal pyramid scheme, reports Yahoo! news.

Herbalife was established in 1980 and operates in over 75 countries. The company is the world’s fifth top direct selling company, with 2.7 million salespeople in roughly 79 markets, reports mlmlegal.com.

For additional information, read the following articles:

Herbalife: Belgian Appeal Court: Herbalife is No Pyramid: Validates Legitimacy: The Next Chapter in Recognition of Personal Use

**See a translated copy of the actual Belgian Court of Appeal Herbalife ruling.

Herbalife Statement Regarding Belgian Appeal Court Ruling

Herbalife: Belgian Court Overturns Pyramid Ruling

Herbalife says Belgian appeals court reversed pyramid scheme finding

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Our next Starting and Running the Successful MLM Company Conference takes place February 27th & 28th, 2014 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

UPDATE: In light of the news that Herbalife indeed is abiding by Belgian law, Yahoo! news reports that the company’s shares have risen nearly seven percent.

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

MLMLegal.com Featured in September Issue of Direct Selling News

Charity — Tue, 03 Sep 2013 20:57:42 +0000

Image courtesy of Direct Selling News.

Direct Selling News featured MLM expert attorney, Jeff Babener, editor of MLMLegal.com, in its September issue. Direct Selling News sourced the following notable article “Herbalife: What the Short Sellers Missed on the Way to the Press Conference,” written by Jeff Babener. Below is an excerpt of the article “Herbalife: What the Short Sellers Missed on the Way to the Press Conference,” published by Direct Selling News:

History repeats itself. Just as Yogi Berra famously said, “It’s déjà vu all over again.”

The 2012 billion-dollar short seller attack on Herbalife, a 32-year-old NYSE listed direct seller of nutritional products in 80-plus countries with annual sales in excess of $3 billion, is a replay of the seminal challenge to the MLM/Direct Selling model won by Amway in 1979 [In the Matter of Amway, 93 F.T.C. 618 (1979)].

In that 1970s FTC challenge, the criticism went to whether or not the core of the MLM referral selling model was a “deceptive” way to market. Similarly, in the 2012 short seller attack on Herbalife, along with other criticisms, a principal complaint was that evidence of “substantial personal use and consumption” of company products by distributors themselves renders an MLM/Direct Selling model inherently deceptive and an illegal pyramid scheme. Armed with multi-hour slide presentations, short sellers and financial bloggers predicted that a direct selling program, in which substantial product is purchased by distributors for personal use, is doomed to collapse as an illegal pyramid scheme and that federal agencies should step in to hasten that demise…

For the entire article, visit Direct Selling News. And, for more information on the direct selling, network marketing, MLM industry, visit www.mlmlegal.com and www.mlmattorney.com.

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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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

MLMLegal.com has released an analytical article by noted direct selling industry expert and legal authority, Jeffrey Babener

Charity — Thu, 11 Apr 2013 20:39:07 +0000

Herbalife: What Short Sellers Missed on the Way to the Press Conference…

The Personal Use Issue in Pyramid Analysis; Who is an Ultimate User?

An excerpt from the article and link to the full article atwww.mlmlegal.com.

Déjà vu, all over again … Yogi Berra

History repeats itself.

The 2012 billion dollar short seller attack on Herbalife, a 32 year old NYSE listed direct seller of nutritional products in 80 plus countries with annual sales in excess of $3 billion, is akin to a replay of seminal challenge to the MLM/Direct Selling model, won by Amway in 1979. In the Matter of Amway, 93 F.T.C. 618 (1979).

In the 1970’s FTC challenge, the criticism went to whether or not the core of the MLM referral selling model was a “deceptive” way to market. In the 2012 short seller attack, along with other criticisms, a principal complaint is that evidence of “substantial personal use and consumption” of company products by distributors themselves, renders an MLM/Direct Selling model inherently deceptive and an illegal pyramid scheme.

Memo to short sellers and algorithmic financial bloggers:

It may be time to reassess.

Some very salient facts and cases may well have been missed in the rush to challenge direct sellers.

A survey of FTC, SEC and Justice Department leading pyramid cases during the last two decades is instructive. Interestingly, in massive releases of the Herbalife short seller and the prolific financial blogging “call to action” that Herbalife is a pyramid that should and will be prosecuted by the FTC, NO ONE has bothered to actually examine the facts of leading FTC, SEC and Justice Department pyramid prosecutions of the last two decades… if they had done so, they might observe a significant chasm that exists between inherently deceptive and egregiously abusive pyramid schemes and the practices of leading direct selling companies.
They also may have missed the FTC’s own statements on personal use, as well as the trending legislation in more than a dozen states, recognizing the validity of personal use as a legitimate end destination of product.

For the full and detailed article “HERBALIFE: WHAT SHORT SELLERS MISSED ON THE WAY TO THE PRESS CONFERENCE…The Personal Use Issue in Pyramid Analysis Who is an Ultimate User?”

For more information, visit our websites at www.mlmlegal.com and www.mlmattorney.com. Or, visit our blogs at http://mlmlegal.com/MLMBlog/ and http://mlmattorney.com/blog/.

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And, as always, visit MLMLegal.com, the best MLM resource on the web. The next Starting and Running the Successful MLM Company Conference will be here before you know it! On May 16^th and 17^th, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 64^th annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. (Can’t make this event? Keep an eye out for our October and February conferences as well.)

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