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We have hosted more than 70 national conferences on starting and running a direct selling, network marketing, MLM or party plan company. We have started and advised many of the leading companies in the industry and we have a “big picture” that may be difficult to find elsewhere. We are big believers in education and our website, www.mlmlegal.com, is hopefully evidence of this, with hundreds of articles, cases, statutes, and scores of videos. We take a particular satisfaction in helping entrepreneurs pursue their dreams and the consequence is often the creation of thousands of jobs and opportunities. And at our conferences, we have started many companies that are today, household names. It has been a pleasure and honor to assemble professionals in these conferences to assist individuals to create “something from nothing.”

At the conference, we facilitate relationship-building, networking, and the educating of MLM entrepreneurs. We bring direct selling experts from around the country to one location to coach attendees on software, technology, compensation plans, sales kits, recruiting, funding, capitalization, legal, and many other topics that are imperative to any MLM executive. Attendees are educated in a classroom-type setting by industry experts and then are offered one-on-one time to speak with any (or all) expert they choose. Our goal is to harness long-term relationships, while educating the next generation of network marketing entrepreneurs about the strength and credibility of the MLM industry. An industry that supports millions of people around the world.

As the creator and host of the original MLM Startup Conference, we support the MLM entrepreneur and play a key role in establishing new companies in the industry through our event. If you’re starting, or thinking of starting a network marketing company, we highly recommend that you attend. This is the best, and most longstanding, conference offered anywhere.

Are you 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.

For more encouraging words to achieve success in network marketing, visit Attorney Jeff Babener’s websites: www.mlmlegal.com and www.mlmattorney.com.

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Front loading generally refers to a process in which a MLM company, or a sponsoring distributor, encourages a new distributor to purchase far more product than is commercially reasonable under the circumstances. Often the “push” is explained to the recruit as necessary to qualify in the plan. This is an unacceptable practice is often one indicia of a pyramid scheme.

On the other hand, virtually all regulatory agencies recognize that a purchase of an “at cost” sales kit is an acceptable practice in the mainstream of leading direct selling companies. Such mandated kits are typically in the $50-$100 range. They generally entail “hard copy” or online supply of sales and marketing materials as well as ongoing sales and marketing materials updates for a year. Typically the mandated sales kit does not include product and generally a company offers an optional deluxe kit that may include product. Such an optional kit, which is often referred to as a “fast start” kit, may contain several hundred dollars of product. This is not unusual. Although the same regulatory standards on upfront mandated purchases are applicable to party plan companies as they are to other companies, it is not unusual to see party plan companies mandate a beginning starter kit that contains a wide array of products, with a price tag several hundred dollars. Regulatory agencies are very liberal in their view of such mandated purchases in party plan companies because party plan companies are so overwhelmingly retail oriented and the movement of product to retail customers is the norm, and not the exception, for party plan companies.

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This newsletter offers recent news, videos, company profiles, and weekly articles delivered to your inbox on a timely basis. Each 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 you’re not the last to know about top MLM news stories, or to hear about the latest scam reports. Our timely headline reporting will keep you up-to-date on stories that affect everyone in the network marketing industry.

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Each newsletter features the profile of a direct selling company, like Avon, Mary Kay, and Amway, 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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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 in Las Vegas. View our conference flyer and speaker list online.

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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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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A Conversation with Jeff Babener Video Series: Learn about the difference between the various compensation plans and how distributors are compensated with each plan. It’s called multi-level marketing since distributors are compensated at each level as they recruit more consultants. How many levels are distributors compensated at? Learn about breakaway compensation plans. Learn the difference between sponsors and recruits. Get the definition of each unique compensation plan and which plans are most common and which are less successful. How many levels deep is it most common to go, and legal, to go?

When does a compensation plan become a lottery, which is considered legal by many states? Which programs have stood the test of time, and which have gone by the wayside? Which compensation plan should you choose so that your company is legal and stands the test of time? Learn how to ask the right questions to determine a legitimate operating MLM company vs. a pyramid scheme. Watch the video.

Keep yourself educated on the legal aspects of the MLM industry. Visit MLMLegal.com. Are you starting a MLM company? Make sure you have your legal aspects covered. Contact legal MLM expert Jeff Babener for your free legal consultation today.

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Watch this video and more here.

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A Conversation with Jeff Babener Video Series: Some companies face issue of manipulation by distributors, with distributors signing up their spouses, children, even pets. This is not so much a legal issue but a standard in best practices for network marketing companies.

Watch the video!

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© 2018 by Jeffrey A Babener
(First Published in World of Direct Selling)

The future ain’t what it used to be.

Yogi Berra

Or maybe it is. In ancient Egypt the pharaohs placed a general tax on the sale of all commodities at the rate of 5% of sale price.  The Romans obviously thought this was a good idea and, after their conquest of Egypt, the rate rose to 10%.  For the next 2,000 years, to this day, bureaucrats have found sales tax a favorite revenue raiser.

The Bombshell… Deja vu, all over again.

In South Dakota v. Wayfair, Inc. June 21, 2018. Slip Opinion 17-494, 585 U.S. ____ (2018). The U.S. Supreme Court overturned a 50 year old precedent on how states can tax sales by out-of-state retailers, holding that its earlier 1967 and 1992 decisions were wrong, and that it needed to rectify its mistake to reflect the economic reality of today’s interstate commerce to prevent discrimination against local brick and mortar retailers that favored online out-of-state retailers. Effectively, it abandoned a decades old bright line analysis that the “physical presence” nexus that justified states to impair interstate commerce, in violation of the Commerce clause of the Constitution was being replaced by a more “amorphous” standard of an “economic reality” impact of out-of-state sellers in states that sought to impose sales and use taxes.

Impact and Response to this “missile” on contact:

For most online sellers: a thermonuclear explosion…life will never be the same.

(Keep in mind that one of the largest online sellers, Amazon, recognized the future, and had already undertaken to collect sales tax in the 45 states that impose sales/use taxes, although most of its third party vendors have not.)

For direct sellers, who sell both online and offline:

More like momentary eclipse of the sun…back to business; they have already been collecting and paying sales/use tax for decades.

Actually, says direct selling, “thank you for leveling the playing field.”

And, as to all online sellers, whether direct sellers or not, “no thank you” long term for an expected flood of creative new state taxes that will develop over the next 20 years in our “virtual and gig” economy. This is just the beginning.

First, What Just Happened?

As summarized by the Court in its syllabus and majority and dissenting opinions:

Wayfair is a major online retailer of home furnishings. Although it has substantial sales into South Dakota, it has no physical presence in South Dakota. Until the Wayfair case, 50 years of court precedent prevented states from impairing interstate commerce, in violation of Commerce Clause, U.S. Const. art. I, § 8, cl. 3, by imposing a duty on out-of-state retailers who had no “nexus” with the state. And for the Supreme Court, “nexus” required physical presence. Two famous cases set the bright line mandate of physical presence: National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), and Quill Corp. v. North Dakota, 504 U.S. 298 (1992). Both National Bellas Hess and Quill involved interstate shipment from products ordered from catalogs.

It is estimated that these two cases caused South Dakota to miss out on $48 million to $58 million annually. And so, like many states, South Dakota sought to test the issue again, claiming that the Internet had changed things, i.e., we had a new economic reality of “nexus” that went beyond physical presence. Based on this half century standard, Wayfair refused to collect sales tax imposed by a relatively new South Dakota sales tax law that sought to impose sales tax responsibilities on out-of-state sellers who sold more than $100,000 in goods and services into the state or carried out more than 200 sales transactions.

Litigation followed, led by South Dakota requesting a declaratory judgment that its new tax was valid. Wayfair raised the long time defense of lack of “nexus” via physical presence. South Dakota lost at the trial court and State Supreme Court and requested review by the U.S. Supreme Court.

The states hit the jackpot. And it was the lucky day for the forty-one states, two Territories and the District of Columbia, all hungry for new taxes, who joined South Dakota to ask the U.S. Supreme Court to reject the test formulated in Quill. In 2017, the U.S. Government Accountability Office pegged the prospective increase to the states, if South Dakota won the Wayfair case, as being between $8 billion and $13 billion per year.

Read the full article here.

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