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Regulatory Scrutiny Increases
ComplianceLegalRisk Roundup

Regulatory Scrutiny Increases

Take steps to clean up reputation challenges 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.

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January 1, 2020 0 comment
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Regulatory Scrutiny Increases
ComplianceLegalRisk Roundup

Regulatory Scrutiny Increases

Take steps to clean up reputation challenges online

By Jonathan Gilliam

Six Steps to Online Reputation Management:

  1. Establish and maintain a robust online brand presence.
  2. Create great content, consistently across multiple platforms.
  3. Link all your properties together.
  4. Produce lots of compelling, interesting videos and promote them to your field.
  5. Take care when communicating about any issues.
  6. 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.

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December 1, 2019 0 comment
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Staying on the Right Side of the FTC with Income Statements
ComplianceLegalRisk Roundup

Staying on the Right Side of the FTC with Income Statements

Establishing simple guidelines for leaders reduces company risk

Kevin Thompson is an MLM attorney and is co-founder and partner of law firm Thompson Burton.

Any income claim that is considered to be deceptive needs a disclosure. The FTC considers an income claim deceptive where information is misrepresented or omitted that would affect a reasonable consumer’s judgment. 

In most cases, distributors are simply unaware of how to promote their opportunities appropriately.

The majority of income claims made by a distributor are more likely than not truthful statements, but the Federal Trade Commission (FTC) is not just concerned with the truth. Promises of riches and an opportunity to live the American Dream can cloud even the most reasonable person’s judgment. With this in mind, the FTC wants to ensure that all potential distributors make a fully informed decision before choosing to join an MLM program.

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September 1, 2019 0 comment
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California Continues to Chip Away at Independent Contractor Status
ComplianceLegalRisk Roundup

California Continues to Chip Away at Independent Contractor Status

Current effort would enshrine Dynamex standards into state law

By Teresa Craighead

The Equal Employment Opportunity Commission has defined sexual harassment in its guidelines as the following: unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when:

  • Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, or
  • Submission to or rejection of such conduct by an individual is used as a basis for employment decisions affecting such individual, or
  • Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.

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August 1, 2019 0 comment
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FTC Under Pressure; Ability to ‘Ambush’ Companies Comes Under Scrutiny
ComplianceLegalRisk Roundup

FTC Under Pressure; Ability to ‘Ambush’ Companies Comes Under Scrutiny

Courts may be signaling concern over the regulator’s authority to obtain injunctions and freeze assets in enforcement cases

By Spencer Reese, founder and partner at Reese Poyfair Richards LLC

The FTC uses the media to their advantage by issuing a press release that it has shut down a “purported” pyramid scheme, knowing that such a press release will effectively kill the company by scaring its distributors away.

The bottom line for direct sellers is that if the FTC loses its §13(b) authority, it loses its punch. Legitimate direct selling companies do not fear squaring off against the FTC so long as they are not blind-sided.

In 2014, a court-appointed receiver under the direction of the Federal Trade Commission (FTC) arrived at the corporate headquarters of Vemma with police in tow. Within a few days they had for all intents and purposes forced the company out of business. The company was given very little advance warning, and no time to mount any sort of sufficient defense. 

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July 4, 2019 0 comment
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#MeToo: Risks and Opportunities Remain in Direct Selling
ComplianceLegalRisk Roundup

#MeToo: Risks and Opportunities Remain in Direct Selling

Culture is ultimately what will make a lasting difference
By Ginny Pasqualone

The Equal Employment Opportunity Commission has defined sexual harassment in its guidelines as the following: unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when:

  • Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, or
  • Submission to or rejection of such conduct by an individual is used as a basis for employment decisions affecting such individual, or
  • Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.

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June 5, 2019 0 comment
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AdvoCare Exits Multi-Level Compensation Model
ComplianceCover StoryDirect SellingFeaturesLegal

AdvoCare Exits Multi-Level Compensation Model

Without warning, company restructures compensation plan to single-level; field leaders stunned

By Teresa Craighead

The sudden announcement has created speculation throughout the channel, with [experts] asking why a company with $472 million in revenue would choose to so dramatically change its business model, seemingly overnight.

“The FTC has basically told us what the right way to do business is. [FTC Associate Director] Lois Greisman has repeatedly said ‘look to the settlement’, ‘look to the MLM business guidance.’ This seems to be a pretty clear indicator they weren’t kidding around.”
—Al Bala, CEO Mannatech

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June 3, 2019 0 comment
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