Features

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.

Strategic shifts and new product lines mark the channel’s response to economic uncertainties

By:  Dave Rauf

Herbalife

Herbalife’s third-quarter profit fell roughly 48% as sales in the U.S. and China continue to slump.

The direct selling giant reported a profit of $42.8 million for the quarter on total sales of $1.3 billion. Herbalife’s revenue for the third-quarter was flat compared to the same time a year ago. Total sales declined 1.5% from last year when calculated on a constant currency basis.

Moving forward, Herbalife CEO Michael Johnson said returning to growth in the U.S. and China — two of the company’s most important markets — will be “our primary focus.” 

An Herbalife regional team is launching new initiatives to drive recruitment, stimulate engagement, improve productivity and support the company’s return to sales growth in the U.S.

January Headlines

US Labor Department Proposes New Independent Contractor Rule

President Biden’s Department of Labor (DOL) is finalizing a new rule under the Fair Labor Standards Act to redefine independent contractor classification, aiming for completion in the second half of 2023. This follows extensive public feedback, including over 55,000 comments since October 2022. The proposal revisits the Economic Realities Test, introduced by the previous administration, to determine employee versus contractor status. The DOL seeks a more holistic approach, in contrast to the 2021 rule’s focus on key factors. Groups like the Direct Selling Association and the U.S. Chamber of Commerce, as well as Republican legislators, have raised concerns, citing potential confusion and impact on small businesses and independent workers.

FTC Issues Revised Compliance Guidance for Health 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.

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.