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

MLM Company Policies on Social Networks and Distributor Raiding

Charity — Wed, 16 Jan 2019 20:36:53 +0000

A post on Facebook is really no different than a mass email.

Clearly, while consultants are with a company they are asked not to get involved in raiding activity. Network marketing companies have mixed opinions on post-termination behavior. Most companies ask that consultants not raid the downline for a certain period of time after they stop consulting for the company. Companies that ask this of their consultants argue that the consultant’s Facebook profile is basically an email list; a post on Facebook is really no different than a mass email. Not many companies specifically outline post-termination rules in their policies and procedures; however, most companys’ position on the issue is effectively the same as if you started sending emails to everyone in your downline once you left the company.

Several approaches have been noted, including the drafting of agreements where companies and distributors have bifurcating social media pages. Basically, consultants would have a personal and professional Facebook page. This causes a bit of a dilemma because many consultants will make close friends with those in their downline. Perhaps not everyone fits into a personal or professional-only account. Companies look at it as more black and white. Companies see it as a consultant holding a lengthy email list, whether it be on Facebook or Twitter, etc., and once they’ve sent our an announcement saying “come join me at my new company…” then it is just as if they are sending a mass email to their downline. Both perspectives are understandable, and so far, there is no industry-wide solution to the problem.

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New Video: Is cross-sponsoring legal? What rights does the distributor have?

Charity — Mon, 26 Nov 2018 17:00:39 +0000

Cross-Sponsoring – Distributors Who Join More Than One MLM Company

A Conversation with Jeff Babener Video Series: Is cross-sponsoring legal? What rights does the distributor have? What rights does the MLM companies have? Can a company legally ask that distributors only work for one company at one time? Distributors are independent contractors. But companies may lose distributors through raiding. What are your rights? And if cross-sponsoring is legal, is it a good idea?

Watch the video to learn the legalities of cross-sponsoring from both the distributor’s and the company’s perspective. To view more videos in this series, visit MLMLegal.com.

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How have raiding rules evolved in direct selling contracts and policies and procedures? New Video!

Charity — Mon, 04 Dec 2017 04:11:30 +0000

Some companies state that you can’t recruit people that you didn’t personally sponsor. If you personally sponsor a friend or family member then why can’t you recruit them to join you at your new company?
The short answer is that company policies have evolved over the years resulting from a combination of increased raiding by distributors who switch companies, on the one hand, and secondly, direct selling companies have become more rigid in trying to retain their sales force, sometimes with good reason, and sometimes appearing to be an “overreach.”
Leading direct selling companies, for instance, around 20 years ago, maintained a policy that required consultants to only offer the opportunity to people that they personally sponsored. That policy was common 20 years ago.
Over time that policy changed. With the increased ease of communication due to technology, many companies asked that consultants not participate in raiding anyone in their organization while they were active with a company. The policy morphed again to require consultants not to sponsor anyone in a new opportunity except for those that they personally sponsored upon leaving for a new company. Then the policy changed again to where companies required that consultants who left a company not sponsor anyone into the new company. In a few instances, some companies have provided non-compete agreements, which aren’t considered fair and not even enforceable as a matter of policy in the state of California. Some companies have gone so far as to tell their distributors that they cannot participate in any direct selling activity for a certain period of time after leaving the company. Almost all states frown on non-compete agreements because they inhibit people from conducting their livelihood. Compared with the policies of twenty years ago, the extremities in policy have morphed extensively in terms of restrictions.
Today, the most common clauses seen are ones in which companies have moved from the concept of ‘don’t recruit anyone unless you’ve personally sponsored them’ to ‘during your time with our company, we ask that you not raid anyone in your sales organization, whether you’ve personally sponsored them or not.’ Most companies today will also ask that former consultants not raid people in their organization and recruit them to another for a period of six months to one year.
Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization. In the party plan arena, companies will often implement restrictions based on product. If you are selling jewelry, for instance, then the company will ask that you not join another company selling jewelry.

Our next Starting and Running the Successful MLM Company Conference takes place February 25 & 26, 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.

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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.

Are Their Concerns about Consultants Marketing Their MLM Business through Social Media?

Charity — Fri, 07 Aug 2015 18:04:31 +0000

Some legal case authorities claim that if a consultant announces that they are going to join another MLM company on Facebook then it’s protected under freedom of expression by the First Amendment. Therefore, a company cannot accuse a consultant of raiding their downline for distributors. Other courts and cases have suggested that consultants separate out their Facebook downline from those of friends and family.

It is very common for consultants to have friends on their social media accounts who are friends and customers, or co-workers and friends, or family friends and work friends, as well as also being someone they know in their direct selling business as customers or sponsors. Since many consultants often sell to their warm market first, distributors often know their customers or sponsor as friends, relatives, or church members. This causes some issues to arise for the MLM company.

A common issue that the industry is grappling with right now occurs when a consultant leaves a network marketing company and joins another MLM company, then begins promoting the second company to their Facebook friends (or other social networks) and to the people who are in their downline organization from the first company. The question is often asked as to whether or not this is considered distributor raiding. The industry has not come to a consensus on this issue yet. Many MLM companies, however, do ask that consultants who leave their company and start selling for another company, not raid their sales organization because they’re damaging the livelihood of all of the other consultants left behind. The industry is working its way through this issue but has not come up with concrete solution to the problem yet.

There is conflicting legal case authority on the issue. Some legal case authorities claim that if a consultant announces that they are going to join another MLM company on Facebook then it’s protected under freedom of expression by the First Amendment. Therefore, a company cannot accuse a consultant of raiding their downline for distributors. Other courts and cases have suggested that consultants separate out their Facebook downline from those of friends and family. But, as we saw above, Facebook friends do not always fit into black and white categories. Often, your friend is also your co-worker. Your relative is also your customer. Your neighbor is also your friend. The courts have argued that Facebook is, in a way, simply a sophisticated means of sending emails because each post is like sending out a bulk email to several hundred people. From this prospective, deciding on whether or not there is a conflict is complex.

We will let you know if the courts come to a deciding factor anytime in the future. In the meantime, if you are in a similar position, we recommend that you read your company’s policies and procedures to see their specific policy on the topic of consultant raiding. You will also find hundreds of articles on our website(s) and blogs on the topic of distributor raiding.

Here are a few that may be of interest to you:

Why do MLM Companies Require Distributors to Use Replicated Websites Rather than Distributor-Created Websites?

Executive Interview by the DSWA – “Legal Hotspots for Direct Selling Companies” with Jeff Babener – Video

Can I and should I join multiple companies and establish multiple downlines?

MLM Company Policies on Social Networks and Distributor Raiding

How Have Raiding Rules Evolved in Direct Selling Contracts and Policies and Procedures? – Video

How Have Raiding Rules Evolved in Direct Selling Contracts and Policies and Procedures?

Has There Been Cases Won or Lost on the Topic of Social Media and Distributor Raiding?

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Has There Been Cases Won or Lost on the Topic of Social Media and Distributor Raiding?

Charity — Tue, 28 Jul 2015 18:31:07 +0000

Has There Been Cases Won or Lost on the Topic of Social Media and Distributor Raiding?

There have been legal rulings both ways on this subject. Some companies have argued that when distributors communicate their intentions to leave a company and begin with a new one on Facebook then they are targeting. Others have argued the opposite point of view. At some point there will be a resolution to this debate at the appellate case level. At this point, most companies would ask that people not promote to people on their Facebook page who’ve been in their downline; however, many distributors would disagree arguing that their Facebook friends are not the friends of the company.

In other cases, consultants want to be “friends” with top leaders and company executives on Facebook in order to stay in the loop and then find themselves in a conflicting position when they want to leave to another company. A deciding factor is yet to be made on this point.

Your best educational resource on the web: check out the hundreds of articles, videos, company profiles, and more at MLMLegal.com.

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.

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How Have Raiding Rules Evolved in Network Marketing Contracts and Policies and Procedures?

Charity — Thu, 29 May 2014 17:47:27 +0000

Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization.

The short answer is that company policies have evolved over the years, resulting firstly from a combination of increased raiding by distributors who switch companies. And secondly, direct selling companies have become more rigid in trying to retain their sales force, sometimes with good reason, although they sometimes appearing to be “overreaching.”

For instance, around 20 years ago, leading direct selling companies maintained a policy that required consultants to only offer the opportunity to people who they personally sponsored. Twenty years ago, this was a common policy.

Over time that policy changed. With the increased ease of communication due to technology, many companies asked that consultants not participate in raiding anyone in their organization while they were active with a company. The policy later morphed again to require consultants not to sponsor anyone in a new opportunity except for those that they personally sponsored upon leaving for a new company. Then the policy changed once again to where companies required that consultants who left a company not sponsor anyone into the new company.

In a few instances, some companies have provided non-compete agreements, which aren’t considered fair and are not even enforceable as a matter of policy in the state of California. Some companies have gone so far as to tell their distributors that they cannot participate in any direct selling activity for a certain period of time after leaving the company. Almost all states frown on non-compete agreements because they inhibit people from conducting their livelihood. Compared with the policies of twenty years ago, the extremities in policy have morphed extensively in terms of restrictions.

Today, the most common clauses seen are ones in which companies have moved from the concept of “don’t recruit anyone unless you’ve personally sponsored them” to “during your time with our company, we ask that you not raid anyone in your sales organization, whether you’ve personally sponsored them or not.” Most companies today will also ask that former consultants not raid people in their organization and recruit them to another for a period of six months to one year.

Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization. In the party plan arena, companies will often implement restrictions based on product. If you are selling jewelry, for instance, then the company will ask that you not join another company which is selling jewelry.

What happens if consultants raid anyway?

As a practical matter, not a legal matter, if a distributor is affecting the entire franchise of the company – having a major impact – a company will not hesitate to file suit and to seek an injunction against the distributor. It is very rare to see a company pursue a consultant who is very low on the sales genealogy or who has a very limited sales organization. Legal action is usually reserved for consultants whose major raiding activities would take a good portion of the business away from the company. Often in situations, such as these, there has been a bad-faith decision by the distributor themselves, which isn’t fair to the company.

Is there a right or wrong? Probably not. However, it is important to the future of direct selling that companies and distributors reach some common ground on acceptable practices by distributors who leave companies and recruit their former colleagues to new companies versus reasonable expectations of companies in restricting distributor movement in a way that is not overreaching in the marketplace.

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