By: David Bland
The paper indicates that the FTC views all companies with a multi-level compensation plan structure as dangerous to the public, and it recommends removing the levels as the best course of action.
The FTC authors suggest three actions that could prevent the risk of pyramid operations.
First, they state that an obvious option would be to end the recruitment aspect of the business.
Second, they suggest that changes to recruitment incentives could “reduce an operator’s ability to induce or allow participation in a transfer scheme.”
Third, they argue that if sellers were not required to make purchases in order to qualify for recruitment rewards, the company would no longer be able to convince the seller to accept retail losses in hopes of gaining back profits with future recruitment.
Until recently, any company in the direct selling channel with viable products and consumer demand for those products could consider themselves operating under Federal Trade Commission (FTC) favor. However, the agency appears to be changing its mind about practices it previously accepted, as indicated first by AdvoCare’s surprising abandonment of its multi-level compensation plan a year ago under FTC pressure.
By: Laurie Girardi, Customer Success and Industry Evangelist for MarGo
Direct sellers give up too soon because they assume people are not interested, when realistically they have not provided enough touches.
Times are hard. We know that. Even if sales are doing well in this stay-at-home period, this is an unsettling time. And yet we also know direct selling will weather this storm, and even emerge better for it.
By: Crayton Webb, CEO of Sunwest Communications
The problem is, if you’re only communicating after the crisis has occurred (or worse yet, coming up with a plan to communicate during the crisis), it’s too late.
Amidst the crisis of the current coronavirus outbreak, it is proving frighteningly easy, ironically, for direct sellers to become complacent. The backdrop of COVID-19 has become an all-consuming distraction. While some direct selling companies, like so many businesses, are forced to scale back and lay off employees, others are experiencing double-digit growth. Whether it’s because of an easily obtainable, high-quality product or the allure of the “ultimate work-from-home gig,” the success can become intoxicating. It’s as if those companies are saying, “We must be doing everything right. Let’s keep doing it.” On the flip side, though, the pain of financial trouble or cutbacks necessarily demand a “keep your head down” internal focus on operational costs and the bottom line.
By Jonathan Gilliam, CEO of compliance firm Momentum Factor
“These warning letters are just the first step. We’re prepared to take enforcement actions against companies that continue to market this type of scam.”
—Joe Simon, Chairman, FTC
Coronavirus. COVID-19. A global pandemic. Whatever you want to call it, news is coming in daily with updated numbers of cases and deaths related to the quickly spreading virus. Cities and countries all over the world are shutting down. It’s a scary time for us all and, as with other crises that arrived suddenly and without warning, we are looking for answers and solutions.
By Courtney Ronan
“If you’re going to build a commercial building, it has to have a wheelchair access ramp. Why would you build a website these days and cut off someone with a disability?”
—Josh Bennett, director of UX, LifeVantage
In October 2019, Domino’s Pizza lost a case that effectively put U.S. businesses with websites on notice. Guillermo Robles, a blind man, sued the company after he was unable to place his order on both Domino’s website and its mobile app on at least two occasions, even with the aid of screen-reading software. Robles’ attorneys argued that Domino’s was required to ensure its online platforms were accessible to individuals with disabilities and referred to Title III of the Americans With Disabilities Act (ADA), which prohibits discrimination on the basis of disabilities in places of public accommodation.
By Dave Rauf
Companies found in noncompliance can be fined $2,500 if the violation is unintentional and $7,500 if intentional.
Businesses operating in California—including almost every direct selling company in the domestic channel—are now required to comply with a sweeping new privacy law called the California Consumer Privacy Act (CCPA), a measure that gives consumers control of how their personal information is used online.
By Dave Rauf
Mediakix, a marketing agency that helps brands launch campaigns with top social media personalities, estimates advertisers spent around $1.7 billion on influencer marketing on Instagram alone in 2019.
In an attempt to reach out directly to the celebrities, bloggers, YouTube stars and Instagram models that make up the universe of social media mavens, the Federal Trade Commission (FTC) has issued new ad disclosure guidelines for influencers (available at www.ftc.gov). The message is clear: Be transparent about partnerships with brands.
By Jonathan Gilliam
Six Steps to Online Reputation Management:
- Establish and maintain a robust online brand presence.
- Create great content, consistently across multiple platforms.
- Link all your properties together.
- Produce lots of compelling, interesting videos and promote them to your field.
- Take care when communicating about any issues.
- Be patient.
Whenever the field engages with negative content, the brand loses.
Regulators are just like you. They search. They Google. They look for evidence online to support their cases. Unfortunately, there is plenty of material online about direct selling companies (much of it false) that can paint a picture of dishonesty or irresponsibility, whether it be from competitors, disgruntled former reps or consumer groups.
By John E. Villafranco
If (the McDaniels) were to prevail…they potentially could resolve their litigation with the FTC without an injunction that prohibits them from participating in MLM activities. They may also not have to pay any money at all.
No other court has aligned with the Seventh Circuit thus far in curtailing the FTC’s enforcement authority by foreclosing its ability to obtain restitution.
At the press conference announcing the AdvoCare settlement, FTC Bureau Director Andrew Smith commented on the consent’s ban on multi-level marketing but noted that “every case is different.” He pointed to the Herbalife consent order, by way of example, and stated that the company did not agree to abandon multi-level marketing altogether but instead agreed to certain protections that the FTC believed addressed consumer harm.