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Originally published online by Direct Selling News (DSN)

In what is being heralded as a significant step forward for the direct selling community, Utah Senator Mike Lee has introduced the Direct Seller and Real Estate Agent Harmonization Act in the U.S. Senate. According to an article by DSN:

"Senator Mike Lee has introduced the Direct Seller and Real Estate Agent Harmonization Act in the U.S. Senate, a companion to H.R. 3495 that addresses direct sellers’ independent status under federal law. Senator John Curtis joined Lee as an original cosponsor of the bill. “Direct sellers everywhere thank Senator Mike Lee for engaging with our community and bringing this issue before the Senate, where direct sellers’ experiences also need to be heard,” said Dave Grimaldi, CEO of the Direct Selling Association. “DSA fights to make sure the people who choose independence over traditional employment have a voice in the laws that affect that choice. No individual seller should have to carry that responsibility alone, and it is our work to ensure that the voices of the 11.6 million Americans who are involved in direct selling are a part of the conversation.” The introduction establishes a parallel legislative effort in the Senate, marking a new stage in the Direct Selling Association’s (DSA) advocacy on behalf of individuals who choose independence over traditional employment. “Greater consistency in how federal law recognizes independent sellers would provide sellers and companies more certainty to build their businesses,” said Kim Drabik, Senior Vice President, Corporate Affairs for Plexus Worldwide and chair of DSA’s Government Relations Committee. “As DSA member companies, we are putting our experience, relationships and resources into making that possible. When we actively participate in the legislative process, we help shape meaningful policies that strengthen our industry and create a positive impact for every direct selling company across the country.”

To continue reading the full article from DSN, click here.

Originally published online as an op-ed by Direct Selling News (DSN)

by Jonathan Gilliam, Founder & CEO, FieldWatch

On September 17, the Federal Trade Commission (FTC) announced a proposed order under which a large multilevel marketing (MLM) operator and two affiliates would pay $225 million, the largest monetary recovery the agency has ever obtained from an MLM. The allegations centered on misleading earnings claims, pressure to buy inventory that was unlikely to sell, and instructions to report sales that never happened. I won't relitigate a case that is still working its way through the courts. But I will say what every direct selling executive should be saying: this is a wake-up call about visibility, not a verdict on our industry. Direct selling has created flexible opportunity for millions of people and delivered real products to real customers for generations. The overwhelming majority of companies and independent representatives operate with integrity. Protecting that reputation means being able to prove it, and that requires seeing what is actually happening in your field.

What does the FTC's action tell direct selling companies?

It tells us regulators are focused on three things: what representatives say about income, how sales are recorded, and whether the compensation structure rewards genuine customer demand. The FTC's press release describes remedies that include requiring independent audits of sales records, training before recruiting, and termination of anyone who fakes sales or teaches others to. Notice what all of those have in common: documentation and oversight. You cannot enforce standards you cannot see.

Why isn't manual compliance monitoring enough?

Years ago, I described compliance teams as playing the world's largest game of whack-a-mole. That's more true today than ever. Our industry has moved from living rooms and hotel ballrooms to Instagram Reels, TikTok, private groups, podcasts, and livestreams. Every post is a potential earnings claim. Every testimonial is a potential regulatory exhibit. Manual monitoring, meaning staff members running Google searches and hoping to stumble onto the problem, is expensive, slow, and unreliable. Each case can consume a dozen person-hours, and the truly risky content often sits in corners of the internet no one thinks to check. Meanwhile, regulators do not accept "we didn't know" as a defense. If your representatives are making claims, you are expected to know.

What is automated compliance monitoring?

Automated compliance monitoring uses technology to continuously scan social platforms, websites, videos, and search results for content that violates company policy or regulatory guidelines. It flags earnings claims, unapproved health statements, and misleading business-opportunity messaging, then routes each issue to the right person or triggers a pre-approved resolution. Done well, it accomplishes three things:

1. Problems are identified in hours rather than months, before a single post becomes a pattern.
2. Every representative is held to the same standard, from top leaders to newest enrollees. That matters because the highest-earning leaders often set the tone for the whole organization.
3. A documented, time-stamped record shows regulators that your program is real, active, and enforced.

Won't monitoring hurt field enthusiasm?

Only if it's done poorly. The worst compliance programs are either heavy-handed, which pushes reps to go quiet or get "creative," or head-in-the-sand, which invites disaster. Automation offers a third path: your compliance team stops spending its days searching and starts spending them on education, policy development, and building relationships with the field. Representatives get quick, fair feedback and clear guidance on how to succeed within the rules. That is good for them, good for their customers, and good for the brand.

What should direct selling leaders do now?

• Audit your visibility. Ask honestly how much of your field's public content you can actually see today.
• Monitor the whole ecosystem. That includes leader-run organizations and training providers, not only corporate channels.
• Pair monitoring with training. Detection without education creates resentment, and education without detection creates blind spots.
• Keep records. If it isn't documented, it didn't happen.

The bottom line

Direct selling is a legitimate, valuable channel, and the companies that thrive in the next decade will be the ones that can demonstrate it. The FTC has told us where it is looking. The smart response isn't fear. It's investing in the tools and culture that let us say, with evidence, that our field is doing business the right way.

Frequently Asked Questions

• What is automated compliance monitoring for direct sellers? It is technology that continuously scans online channels for representative content that violates company policy or regulations, then flags and routes issues for fast resolution.
• Why does it matter after the FTC's record MLM settlement? The action highlighted regulators' focus on earnings claims and sales reporting, and companies are expected to know what their independent representatives are saying and doing.
• Can automation replace a compliance team? No. It removes low-value manual searching so professionals can focus on strategy, training, and field communication.

The U.S. Supreme Court has struck down a federal law that bars the president from firing members of the Federal Trade Commission (FTC) and other independent agencies. According to the SCOTUSblog:

"The Supreme Court on Monday gave President Donald Trump sweeping new authority over approximately two dozen multi-member agencies that Congress intended to be independent. By a vote of 6-3, the justices struck down a federal law that bars the president from firing members of the Federal Trade Commission except in cases of “inefficiency, neglect of duty, or malfeasance in office.” That law, a majority of the justices ruled, violates the constitutional separation of powers between the three branches of government. And in reaching that decision, the court overruled its 91-year-old decision in Humphrey’s Executor v. United States, which had upheld the law at the center of the dispute. More broadly, Monday’s decision was a major victory for proponents of the “unitary executive” theory – the idea that the president should have complete control over the executive branch. Under this theory, the president should be able to fire any member of the executive branch, and laws – like the one that the court struck down – that restrict his ability to do so violate the separation of powers. Writing for the majority, Chief Justice John Roberts contended that “the President must have the assistance of officers he can trust. Although it is up to the Senate to decide whether to confirm those with whom the President would prefer to work, neither Congress nor the courts may saddle him with those with whom he cannot work. Subordinates who exercise the President’s power are subject to removal by him. Then, and only then, can they remain accountable to the President, and the President to the people.” Justice Sonia Sotomayor penned a 49-page dissent that was joined by Justices Elena Kagan and Ketanji Brown Jackson. “Today,” she wrote, “the Court discards” the “democratic regime” created by the Constitution “in favor of one that distorts the structure of Government to fit the majority’s theory of unitary, total executive control. The result,” she concluded, “is a President who emerges with far greater power than ever before.”

To continue reading the full post from the SCOTUSblog, click here.The Federal Trade Commission (FTC) is currently seeking public comment on an Advance Notice of Proposed Rulemaking (ANPRM) regarding the current Negative Option Rule and proposed amendments to the rule in order to better address deceptive or unfair negative option practices. According to the FTC press release:

"The Federal Trade Commission announced today that it is seeking public comment on an Advance Notice of Proposed Rulemaking (ANPRM) concerning the agency’s Rule Concerning the Use of Prenotification Negative Option Plans, commonly known as the Negative Option Rule. The ANPRM asks the public: to weigh in on the current Rule; whether proposed amendments are needed; and about potential regulatory alternatives to address deceptive or unfair negative option practices. Negative options are a common form of marketing in which the absence of affirmative consumer action constitutes consent to be charged for goods or services. Negative options are widely offered and can provide benefits to both sellers and consumers. However, such practices can harm consumers when companies make misleading or inadequate disclosures, bill consumers without their consent, or make cancellation difficult or impossible. The Commission continues to receive thousands of complaints each year -- including more than 100,000 complaints in the past five years—about negative options and related practices. “Negative option subscriptions can offer procompetitive features to consumers and the marketplace more broadly by lowering transaction costs and ensuring consumers receive uninterrupted service,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “The Commission’s enforcement track record suggests, however, that negative option subscriptions continue to be plagued by difficult cancellation processes, unlawful retention tactics, and a suite of other impediments that prevent consumers from easily switching or ending subscription services. Neither consumers nor competition are protected when consumers are enrolled in programs that they either do not want or cannot cancel.” The ANPRM announced today, seeks public comment to determine whether and how the Commission should use its authority to address negative option marketing, including whether the agency should amend the current rule to address deceptive or unfair acts or practices."

To continue reading the FTC's full press release, click here.The U.S. Department of Labor has announced plans to repeal a 2024 ruling regarding the classification of independent contractors. According to an article from Direct Selling News (DSN):

"The US Department of Labor under the Trump administration announced plans to repeal a ruling from 2024 that requires a company to treat workers as employees when they are “economically dependent” on the company for work. Opponents say the original rule made it harder to classify workers as independent contractors, forcing companies to spend more on them as employees. Employees, under the federal wage law, are entitled to minimum wage, overtime pay, unemployment insurance and protections – benefits that can cost businesses up to 30% more, according to Reuters. The original, Biden-era rule, which was in place for only a brief amount of time before it was blocked in Congress by Republicans, was expected to impact industries that rely heavily on contractors, like trucking, delivery services, app-based transportation and the direct selling industry.

The proposal will launch a 60-day period for public comment."

For additional information on this story from DSN, including the Direct Selling Association (DSA) response to this proposed repeal, click here.On Friday, February 20, the United States Supreme Court handed down a decision that invalidates most of President Donald Trump's tariffs. According to an article from the SCOTUSblog:

"In a major ruling on presidential power, the Supreme Court on Friday struck down the sweeping tariffs that President Donald Trump imposed in a series of executive orders. By a vote of 6-3, the justices ruled that the tariffs exceed the powers given to the president by Congress under a 1977 law providing him the authority to regulate commerce during national emergencies created by foreign threats. The court did not weigh in, however, on whether or how the federal government should provide refunds to the importers who have paid the tariffs, estimated in 2025 at more than $200 billion. In his dissenting opinion, Justice Brett Kavanaugh suggested that the federal government “may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others.” Moreover, he added, “because IEEPA tariffs have helped facilitate trade deals worth trillions of dollars — including with foreign nations from China to the United Kingdom to Japan, the Court’s decision could generate uncertainty regarding various trade agreements. That process, too, could be difficult,” Kavanaugh warned. The law at the center of the case is the International Emergency Economic Powers Act, known as IEEPA, which authorizes the president to use the law “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the president declares a national emergency with respect to such threat.” A separate provision of the law provides that when there is a national emergency, the president may “regulate … importation or exportation” of “property in which any foreign country or a national thereof has any interest.”

To continue reading the full story from the SCOTUSblog, click here. Additionally, Troy Keller of Dorsey + Whitney LLP had the following to say about the decision and its potential positive impact for businesses, including those in direct selling:

"The Supreme Court decision is of course incredibly significant in finding the tariffs relying on IEEPA exceeded the authority granted by that statute, and so were illegal. In theory this means companies should be able to get refunds of the tariffs they paid under IEEPA. That point is remanded down to the Court of International Trade to sort out, so the specific pathway there is not clear. Companies may want to submit a claim to the court right away to get into that queue or await more clarity from CBP. Our firm will be working with World Trade Center Utah to lay out some potential resources and routes for Utah companies."

To read more about the decision from Dorsey + Whitney, LLP, click here.The Ninth Circuit Court of Appeals has upheld a decision in favor of the Federal Trade Commission (FTC) to issue a permanent injunction and over $7 million in civil sanctions against people engaged in an illegal multi-level marketing (MLM) scheme. According to an article from JD Supra:

"The court’s opinion in Federal Trade Commission (FTC) v. Noland sheds light on the scope of the agency’s power to obtain monetary relief after the Supreme Court restricted the FTC’s authority under Section 13(b) of the FTC Act in a 2021 case, AMG Capital Management v. FTC. In Noland, the defendants attempted to use the AMG Capital decision to challenge the court’s ability to award compensatory sanctions for contempt and redress under Section 19 for a rule violation. The Ninth Circuit affirmed the district court’s rejection of those arguments.

FTC Sues Individuals Operating Illegal Pyramid Schemes

In 2020, the FTC sued four people who operated two multilevel marketing businesses: Success by Health and VOZ Travel. Both companies encouraged customers to make person-to-person sales by promising “financial freedom” and misrepresenting sellers’ earning potential. Success by Health sold nutraceuticals, and VOZ Travel purported to offer online vacation services. Despite never creating the advertised products, VOZ Travel earned over $1.1 million in revenue. One of the defendants, James Noland, had settled a similar lawsuit with the FTC in 2002. That settlement prohibited Noland and those acting “in active concert” with him from operating any illegal marketing scheme. After a bench trial, the district court held that the defendants operated an illegal pyramid scheme in violation of the FTC Act, the 2002 settlement agreement, and two FTC regulations: the Merchandise Rule, which requires sellers to offer refunds for delayed goods, and the Cooling-Off Rule, which requires door-to-door sellers to offer buyers a three-day cancellation window. The district court imposed an asset freeze, issued a $7 million sanction for contempt and $6,829 in damages for the rule violations, and barred the defendants from participating in any future multilevel marketing business. On appeal, the defendants did not dispute their liability. They instead argued that the FTC lacked authority under AMG Capital to sue for money damages without first exhausting the administrative process. The defendants asserted that the $7 million contempt sanction and lifetime bar on multilevel marketing were unduly punitive and an abuse of the district court’s discretion.

Ninth Circuit Upholds the FTC’s Remedial Authority

The Ninth Circuit rejected the defendants’ characterization of the contempt sanctions and reaffirmed the district court’s authority to issue civil sanctions that “coerce compliance” with a court order. First, the $7.3 million figure equals the defendants’ net revenue gained in violation of the 2002 settlement. The defendants had the opportunity to provide evidence to support a lower figure and failed to do so. Moreover, the FTC must return any excess funds to the defendants after consumers are compensated, preventing an alleged “windfall” to the FTC."

To continue reading the full article, click here.

Why Identity-Based Surveillance is the New Standard in Compliance Monitoring

by Lauren Poel, General Manager, Momentum Factor / FieldWatch

 

Executive Summary

In the evolving landscape of direct selling, compliance risks are no longer confined to explicit brand mentions or overt product promotions. Today, regulators and watchdogs are leveraging social media surveillance to identify violations — even when the company name, product or logo is nowhere to be found. This white paper explores a rising enforcement trend in which direct sellers are being held accountable for the conduct of independent representatives whose posts appear brand-agnostic on the surface but are traceable through digital identity and past affiliations. It outlines the risks, regulatory rationale, and a forward-looking strategy for building a resilient compliance framework that mirrors the investigative techniques now used by enforcement agencies.  

Introduction: The Compliance Landscape Has Changed

Independent distributors have long been the lifeblood of direct selling companies. Through social media, many of these individuals have evolved into micro-influencers, extending the company’s reach organically. However, that same decentralized reach has introduced new compliance vulnerabilities. Regulators now focus less on what’s said and more on who’s saying it. This shift means that even “silent” posts — those lacking product images, brand names or corporate hashtags — can trigger regulatory scrutiny if the author is a known distributor.  

Identity Over Content: A New Regulatory Lens

• A health coach posts about “gut-healing journeys” without naming a supplement brand.
• A former financial product rep shares screenshots of passive income, avoiding links or brand tags.
• Distributors receive internal instructions not to reference the company at all — guidance that later becomes part of enforcement evidence.

• Europe: A regulatory body linked investment claims back to a direct selling firm by analyzing the poster’s historical social footprint.
• U.S.: TINA’s reports showed individuals making deceptive claims with no brand identifiers, yet prior posts verified their distributor status.
• Internal Communications from some companies have revealed tactics designed to evade detection — often worsening liability.

After serving multiple years as the firm's Director of Client Success and Business Development, Lauren Poel has been named General Manager at Momentum Factor.  In her new role as General Manager, Lauren will continue to ensure client success and manage business development while also being responsible for operations at the firm. She brings a wealth of experience in business to her new position that includes client relations, communication, sales and much more. "I am extremely excited to have Lauren take on this new role with our team," said Momentum Factor Founder & CEO Jonathan Gilliam. "Her outstanding work ethic, background and track record for success at all levels will be a tremendous asset to our firm as she takes on the position of General Manager."During its Direct Selling Day on Capitol Hill, the Direct Selling Association (DSA) announced that the House Committee on Education and the Workforce moved the Direct Seller and Real Estate Agent Harmonization Act out of committee in order to clarify independent contractor status for direct sellers. According to an article from Business Wire:

"The Direct Selling Association (DSA) announced that the House Committee on Education and the Workforce, chaired by Rep. Tim Walberg (MI-5), successfully moved The Direct Seller and Real Estate Agent Harmonization Act out of committee, marking the most significant legislative victory for the direct selling channel in decades.

Direct Selling Association Advocacy Drives Historic Committee Vote: H.R. 3495 Advances as Entrepreneurs Rally on Capitol Hill

The milestone vote coincided with DSA’s annual Direct Selling Day on Capitol Hill, where 85 direct sellers and executives from across the country are meeting with more than 100 elected officials to highlight the channel’s impact and advocate for independent entrepreneurs. H.R. 3495 would explicitly define direct sellers and real estate agents as independent contractors under the Fair Labor Standards Act (FLSA), harmonizing federal law with the Internal Revenue Code, which has recognized this classification since 1982. The bill provides clarity and protection for millions of Americans who build businesses in these industries, reducing legal uncertainty and strengthening entrepreneurial opportunity. “This is proof that advocacy works,” said Dave Grimaldi, CEO of the Direct Selling Association. “We brought entrepreneurs from across the U.S. to Capitol Hill to share their stories and explain the real-world value of this channel. Today’s committee vote is a historic win for independent workers and shows the power of collective voices. DSA and its members have pushed for this clarity for decades, and this milestone brings us closer than ever to protecting the freedom to work independently and build businesses on your own terms.”

To continue reading the full article from Business Wire, click here.