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

MLM Attorney – How a MLM Lawyer Can Help Your Direct Selling Business

Charity — Tue, 19 Feb 2013 23:06:36 +0000

This blog post is the companion post to the video T he Legal Issues of Starting and Running a MLM Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:

Hi, I’m Jeff Babener of MLMLegal.com, and I’d like to talk to you today MLMLegal.com. Don’t leave home without it.

At first glance, one might question the role of the MLM law expert in a marketing-driven industry. However, your MLM lawyer may be the single most valuable resource that you will ever utilize.

There are very few in the gene pool who have intimate, practical knowledge, as well as legal knowledge of the business; often understanding the business better than most of his or her clients. It is a unique blend of marketing, practical knowledge, and experience combined together, with practical legal experience, that may cause the MLM lawyer to answer questions (off the top of his or her head) in five minutes what would take a typical business lawyer five years to research. And, in which case, they would still probably not understand the issues, let alone the solutions. For better or for worse, the practices of the MLM industry have induced scores of legislation and regulatory control, such as pyramid statutes, MLM statutes, Business Opportunity, security, FTC, and postal regulation. Notwithstanding the success of the industry, there is always tension between the regulatory community and the MLM industry. Overzealous regulators and rouge operators guarantee that this state of affairs will always exist.

Later issues with distributor relations, distributor discipline, FDA, trademark, tax, and international expansion arise. It is easy to see why the MLM attorney is probably the first person with whom you should establish a relationship and with who you should grow. That person is a trusted business advisor and a member of your business team.

At a minimum, you would be premature to jump into the marketplace without a legal review by MLM Legal Counsel of the most basic of sales kit contents. The basics include representative agreements, policies and procedures, product brochures, marketing plan presentations, as well as various forms, ranging from retail receipts to auto ship, to multiple owner applications, etcetera.

Responding after the fact to regulatory agencies over deficient materials or answering distributor complaints for slip shot documentation is too little, too late. And it will be too bad for the start up MLM business.

Wishing you the best in your direct-selling business, I’m Jeff Babener.

For more information visit our websites: www.mlmlegal.com and www.mlmattorney.com.

Or, visit these links for more information:

Why You Should Trademark Your MLM Company Name

Profile of the Leading MLM Law Firm – Babener & Associates and MLMLegal.com

An Introduction to Direct Selling and The Basics of MLM

Recruiting Advice from an Industry Expert – The MLM Fairytale “Network Marketing and Frogs”

Jeffrey Babener’s Youtube Channel Reaches 60,000 Views

Short Course on Network Marketing: Q&A with Jeffrey Babener on Pyramid Schemes Video

Profile of a Leading MLM Law Firm – Babener & Associates Video

How Does a Business Lawyer become a MLM Lawyer? Video

Is a MLM Lawyer a Typical Lawyer? Video

What is the role of an Experienced MLM Legal Counsel? Video

CNBC.com Cites Legal Expert, Jeffrey Babener on FTC Business Opportunity Rule

The Role of MLM Legal Counsel – Why Hire a MLM Attorney

Where to Find MLM Startup Tips and Answers from an Industry Expert

An Interview with Industry Expert and Advocate, Jeffrey Babener

Interview with Expert MLM Attorney – How to Handle Compliance Discussions with your Distributors

Make sure to visit our blogs for the latest information on the direct selling industry: MLMLegal Blog Home and MLM Attorney Blog Home. HINT: Chose a category to narrow your search for discussion topics!

Find us on our social networks:

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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. The next Starting and Running the Successful MLM Company Conference is quickly approaching! On February 21^st and 22^nd, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 63nd 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? Our next Conference takes place May 16^th & 17, 2013 in Las Vegas! Call our office to register today!)

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

Relationship between MLM and the Federal Trade Commission (FTC)

Charity — Wed, 19 Dec 2012 23:18:03 +0000

A vital question that is often asked of us relates to the relationship between the direct selling, network marketing and MLM industry and the FTC. It has been a bumpy road. I can say that today it is a cooperative road, but early on in the aftermath of the Dare to Be Great pyramid schemes in the 1960s and in 1975, the FTC challenged Amway as being an illegal pyramid scheme. After four years of litigation in 1979, an administrative law judge of the FTC ruled that Amway was a legitimate business opportunity which has now paved the way for every other company that has ever come along. The ruling was based on the fact that Amway promoted retail sales, had a buyback policy for people who had inventory and wanted to leave the business, and adopted a 70 Percent Rule, encouraging people and telling people to please don’t buy more product unless they have either used or sold the product previously purchased. These became known as the “Amway Safeguards” and they have been cited in every case ever since.

That was the last the industry heard from the FTC, for the most part, other than various product-related issues. That is, until the mid-1990s when the FTC started to revisit the question of personal use by distributors. Some of the consent decrees with companies that were really egregious violators, were not in adjudicated rulings, but consent decrees, the FTC’s position was that at least 50 percent of product needs to be sold outside of the distributor network for a company to be legitimate. This put a lot of tension on a lot of companies, particularly health products companies that have a lot of personal use. There has been a lot of debate back-and-forth and a number of states, at the request of the industry, have changed their pyramid statutes to recognize personal use as a legitimate end-destination and an ongoing dialogue still occurs with the FTC. In fact, in a 2004 FTC Staff Advisory Opinion, the FTC actually recognized the validity of personal use by distributors so long as the purchases of product are founded on the actual desire for the product as opposed to pyramid schemes in which distributor purchases are often primarily to merely qualify in the business opportunity. Said the FTC, “..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.”

Today, at industry conferences, the FTC is a participant and it always tends to assure the industry it recognizes its industry. As a matter of fact, just a couple of years ago, the FTC sought to modify its Business Opportunity Rule and considered some options that would have made it much more restrictive for MLM companies to recruit. After an onslaught of letters and comments to the FTC, the FTC modified its position on the Business Opportunity Rule and came into agreement for the most part with the industry on how things should go.

There will always be tension between the FTC and the industry on the issue of personal use, and overall, there seems to be a consensus. It is the observation in the industry that the FTC chases after egregious companies and does not chase after what we would normally consider legitimate companies.

For more information about network marketing and the FTC, watch the companion video to this blog post: What is the Relationship between MLM and the FTC?

Or, read one of our many articles on the Federal Trade Commission:

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:
New! 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

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

For more information on the direct selling industry, visit www.mlmlegal.com or www.mlmattorney.com.

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