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Commission addresses AI-related consumer concerns to ensure ethical use and market integrity

By:  David Bland

“AI, in particular generative AI, is still evolving rapidly, but it already has the potential to transform many industries and business practices. Notably, there is no AI exemption from the laws on the books.” – FTC

In the continuously evolving landscape of direct selling, 2023 witnessed the emergence of artificial intelligence (AI) and the tools it powered as a transformative force within the channel. As in other business sectors, direct selling companies have begun integrating this technology into their core operations, harnessing AI to enhance customer engagement, optimize supply chain management, and refine sales strategies with advanced analytics and predictive modeling.

Regulators are also keeping a close eye on these technologies. As businesses across the country embrace these new tools, the Federal Trade Commission (FTC) has made it known that it is vigilantly monitoring the marketplace and company behavior on behalf of consumers. The Commission’s Office of Technology is tasked with analyzing AI’s trends and advancements as well as its risks to ensure that these emerging tech products are used by businesses in a manner that is both ethical and compliant with existing consumer protection laws.

Is your Website a Potential Liability?

April 2023 Issue – By William M. Miller

In this digitally dependent world, the first contact many consumers have with a company is through its website. As a result, more than ever, it is essential to have a website that complies with both United States and foreign laws, not only to safeguard potential and existing customers but also to avoid costly lawsuits that may result from non-compliance.

With a few exceptions, it is well established that any retail website doing business in the United States must be accessible to individuals with disabilities (particularly those that also do business through brick-and-mortar stores). As a practical matter, what this means is that the website must be coded to allow it to interface with screen reading software that enables a person that is blind or has low vision to access the website. 

Creating lasting legacies through charitable giving and passion-driven support is a cornerstone of the channel

“It’s humbling to see the impact Reliv, our Ambassadors and the Reliv Kalogris Foundation (RKF) have had.” Scott Montgomery, President, Reliv

By:  Jenna Lang Warford

Direct selling is a channel driven by passion: that of the founders, the executive teams, support staff and, perhaps most of all, the sales field. So it’s no surprise that charitable giving is a prevalent component in many companies. While a few companies may have brought their charitable foundations more to the forefront due to Millennials’ and Gen Z’s drive to have careers with a cause they’re passionate about, most were already active and vocal about their give-back positions—some of which directly align with the company’s products.

Texas direct seller successfully defends itself against all charges, business model upheld

By:  David Bland

“…any company without a healthy preferred customer program would be well advised to give serious consideration to instituting and supporting such a program.” – Larry Steinberg, Chair, Multilevel Marketing Industry Group, Buchalter

In a pivotal ruling, Dallas-based direct sales firm Neora has prevailed against the Federal Trade Commission (FTC) in a multi-year legal case that has drawn the focus of industry executives, direct selling participants and regulatory agencies. The U.S. District Court for the Northern District of Texas, Dallas Division, announced its decision on Sept. 28, 2023, stating that the FTC failed to provide substantial evidence to support its claims that Neora operated as a pyramid scheme. After a seven-year battle, the ruling comes as a major win for Neora and the direct selling channel at large, affirming the legality of the company’s business model.

Burbach is Co-Chair of Foley and Lardner’s State Attorneys General and FTC Consumer Practices

SSN: What triggered the lawsuit?

EB: Connecticut-based Truth in Advertising (TINA) is a self-proclaimed tax exempt “consumer advocacy group,” which also sometimes refers to itself as “journalists.” TINA consists of merely seven people. TINA is funded by Hyatt Hotel heiress Karen Pritzker. In 2016 TINA learned that Neora (at that time known as Nerium) had won an award from the Direct Selling Association (DSA) so it decided to “investigate” Neora.

TINA had no consumer complaints about Neora (at that time known as Nerium). Nevertheless, TINA submitted its own complaint about Neora’s advertising to the FTC. TINA proclaimed that Neora and its Brand Partners were violating the FTC Act by making income and product claims. 

The Direct Selling Self-Regulatory Council (DSSRC) has maintained a steady flow of government referrals in 2023, underscoring its dedication to upholding compliance standards for the direct selling channel. 

In January 2023, the Council referred Perfectly Posh, a Salt Lake City, Utah-based personal care and beauty company, after the company and its salesforce representatives made multiple income claims, including several claims about “replacing your income” and achieving “career-level income.”

Efforts by DSSRC to contact Perfectly Posh through a November 2022 Notice of Inquiry yielded no response from the company. Despite subsequent outreach, including a 10-day notice, Perfectly Posh did not provide a response to DSSRC’s inquiry, prompting the matter to be referred to the Federal Trade Commission (FTC).

Proposed law aims to reshape logistics and procurement, triggering global impact and debate

By:  David Bland

“The CSDD opens a transformative era for all businesses, direct selling included, with acute implications for companies with complex supply chains… Preparedness is paramount.” —Laure Alexandre, Executive Director, SELDIA

The European Union (EU) is preparing to enforce a groundbreaking supply chain law that aims to revolutionize logistics and procurement operations across the continent. The Corporate Sustainability Due Diligence Directive (CSDD), also called the European Supply Chain Act, seeks to hold companies accountable for their impact on human rights and the environment, not only within their own operations but also within their supply and value chains.