Direct Selling

Direct Selling Executives Break Traditional Silence

Usually quiet on social issues, major companies issue bold statements

By: David Rauf

“The fact that leadership in companies has taken this stand is a very distinct change in culture.”

—Connie Tang, former CEO, Princess House

“This is a human issue, social issue and a justice issue.”

—Ryan Napierski, President, Nu Skin

Several major direct selling companies are joining a growing chorus of corporations issuing public statements in support of racial equality after protestors poured into the streets across the country following the death of George Floyd, an unarmed black man who died in police custody on Memorial Day.

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July 1, 2020 0 comment

Cover Story Direct Selling Features

Channel Reacts to FTC Warnings

Companies scramble to meet increased regulatory pressure on improper claims

By: David Rauf

“How much you want to put in it now and how tight you want to make the screws, that’s up to each company. But I would not hesitate to make it a priority today, especially.”

—Lois Greisman, Associate Director of Marketing Practices, Federal Trade Commission

The letters are working and, given the scope of the scams out there right now, we want to get the best and fastest results we can with the most efficient tool we have. Right now, for these coronavirus-related issues, that’s warning letters.

—Andrew Smith, Director, FTC Bureau of Consumer Protection

The Federal Trade Commission (FTC) opted in late April to issue letters to 10 direct selling companies warning them to stop making claims about products and business opportunities associated with the coronavirus because it was “fast and efficient.” But direct sellers shouldn’t necessarily expect to receive warning letters moving forward if the FTC targets a company for something outside of COVID-19-related claims.

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June 1, 2020 0 comment

Cover Story Direct Selling Features

FTC Issues Warning Letters to Direct Sellers

Agency targets 10 companies for alleged COVID-19-related income and health claims from the field

By: David Rauf

“During this health and economic crisis, we are on the lookout for false income claims for work-at-home opportunities, in addition to spurious health claims that products can treat or prevent COVID-19.”

—Andrew Smith, Director, FTC Bureau of Consumer Protection

“Your business opportunity participants and representatives must immediately cease making all express and implied earnings claims that would be false or misleading to current or prospective participants.”

—Excerpt from the FTC’s COVID-19 letter to Rodan + Fields LLC, April 24, 2020

The Federal Trade Commission (FTC) has a message for direct sellers: Keep the COVID-19 pandemic totally out of your sales and recruiting spiels.

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May 2, 2020 0 comment

Cover Story Direct Selling Features

Coronavirus Begins to Impact Direct Sales Channel

COVID-19 upends everyday life around the world and in the U

By Dave Rauf

“The scope and duration of business disruption and the related financial impact from the coronavirus can’t be reasonably estimated at this time.”

—John Agwunobi, CEO, Herbalife

“No company is immune, but those that are more reliant on social media to execute business and have a higher degree of subscription sales in their business models are going to be relatively better off.”

—Doug Lane, principal, Lane Research

Direct sellers are bracing for a significant financial blow as the reality of the novel coronavirus sweeping the globe sets in. At press time for this issue, the pandemic is in full swing, with cases being reported in every state and rising daily.

The virus that causes the disease called COVID-19 has upended everyday life around the world, and rattled the global economy.

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April 1, 2020 0 comment

Cover Story Direct Selling Features

FTC Doubles Down on Compensation Plan Scrutiny

Agency claims ‘money transfer scheme’ in latest enforcement action

By Dave Rauf

The vast majority of participants in Success By Health lost money as the company’s compensation plan rewarded distributors based on how many new recruits they could sign up and how much inventory they could sell to those same recruits, not from retail sales.

—Paraphrased from FTC suit against Success by Health

“The FTC is trying to rewrite the law through enforcement proceedings.”

—Brent Kugler, partner, Scheef & Stone

The Federal Trade Commission (FTC) has dropped the hammer on another MLM, marking the third pyramid scheme case brought against a direct seller in the last several months as part of a series of enforcement actions that have rattled the industry.

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March 1, 2020 0 comment

Cover Story Direct Selling Features

Direct Sellers Lag in Hispanic Market

Buying power to top $1.9 trillion

By Dave Rauf

Many companies are still behind the curve and are missing the opportunity to develop a growing segment of the Latino market.

At a recent Direct Selling Association meeting, Ideneth Vega began her presentation to dozens of executives a bit differently—by speaking in Spanish. The room, full of non-Spanish speakers, looked quite puzzled at first, she says.

But there was a good reason for the bilingual approach. Vega, the vice president of marketing for Houston-based Zurvita, was presenting on direct selling marketing efforts geared toward the burgeoning Hispanic demographic, a segment of the population growing faster than any other minority group in the country and whose purchasing prowess is also increasing exponentially.

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February 1, 2020 0 comment