Neora’s challenge of FTC closes surprising year
Another year has ended, but what a year it has been! Who could have imagined that 2019 would bring the end of AdvoCare’s multi-level structure, or the filing of a lawsuit against the foremost agency that prides itself for its fight against direct sellers?
The Federal Trade Commission (FTC) has been a subject in nearly every one of our 12 issues in 2019, which clearly speaks to the agency’s extensive influence in our channel. This month, both our cover story, page 1, and our Getting Real interview, page 25, explore the Neora lawsuit against the FTC in depth.
Neora’s challenge against the FTC’s basic right to file suit against any company on the grounds of overreach is unprecedented.
But the past year has seen the agency behave in such a slippery manner, including making allegations against direct sellers for behaviors and attributes they’ve previously signaled as legal. The lawsuit against the regulatory agency is certainly most welcome, and frankly a relief that standards may be made more clear.
In fact, I wonder if this lawsuit, along with recent court decisions that appear to curb the agency’s authority, will provide a very different backdrop in which the FTC operates in 2020.
We’ve also seen many companies arise or join the channel with new strategies such as instant pay, flatter genealogy structures and other significant compensation plan alterations intended to keep them clear of any regulatory agency scrutiny. The success of these companies could significantly alter the face of direct selling in the coming years.
In this issue, don’t overlook our custom-designed infographic in The Optics: Women in Leadership. The graphic highlights a few of the accomplishments that women have made in business over the last 150 years.
It makes for an interesting companion to the Special Report, which explores the lack of female leadership in many companies, including those in the direct selling channel.
Also this month, The Ranks features a compilation of our 2019 lists, cataloged for your easy reference. You can review all of the lists in their entirety on socialsellingnews.com.
I hope you enjoy this last issue of the year. From our team here at Social Selling News, we wish you and your loved ones to have a blessed holiday season. We’ll see you in 2020!
Legal and compliance issues now dominate strategic planning
In the spring of 2018, as we contemplated what to put on the cover of Social Selling News’ launch edition, I felt strongly that our channel was moving into a new era, one dominated by compliance issues and regulatory scrutiny.
As a result, our very first cover story presented the Federal Trade Commission’s (FTC) shifting focus from pyramid scheme allegations to income claim allegations in order to tame unruly direct selling companies.
Though the FTC apparently has not abandoned its pyramid scheme approach, as clearly indicated in the recent AdvoCare enforcement action, I believe we have been correct in stressing the importance of paying attention to the regulatory landscape.
In the past, the sales and marketing teams of direct selling companies have taken the lead over all other departments, forging ahead with new promotions, programs and products. Sure, the team was required to run everything by the legal department, but it often felt more like an irritating obligation than anything else. My, how times have changed.
I feel very strongly that over the last 18 to 24 months, the legal and compliance departments of direct selling companies should join sales and marketing in the driver’s seat and become equal partners in strategic planning and implementation.
If you haven’t noticed yet, the world in which we operate is changing. In our cover story this month, we cover the AdvoCare enforcement action in detail. In that article, attorney John Villafranco very rightly states, “Those who proceed without observing what the FTC is saying do so at their own peril.” I could not agree more.
We’ve written quite a lot about the FTC over the past year, even going so far as to ask our readers to consider the FTC’s point of view in protecting consumers. We are not defending “attacks on our model,” but we are taking the position that some things in our channel need to change, and we need to get on board with making that happen so that we can preserve all of the great things we do offer people who are seeking an entrepreneurial approach to their lives.
Please join us in January in Salt Lake City at the Direct Selling Legal and Compliance Summit, Jan. 19-21, as we discuss the most important issues facing the channel today. Find out more at dslcsummit.org. SSN is the media sponsor of this event, and I hope to see many of you there!
Heidi Thompson, who previously served as president of Scentsy, will now share the title of co-CEO with Orville Thompson. The husband and wife team founded the company 15 years ago and have led Scentsy as equal partners, though unofficially. They have since scaled back their involvement in daily operations and will continue to focus on long-term, high-level contributions to company growth.
Dan Orchard has been promoted to president of Scentsy. He was previously general manager of emerging markets and has been an integral part of Scentsy’s executive team for 10 years, with strong engagement and interactions with consultants in multiple roles and leading international expansion. His prior direct selling experience includes working with Nu Skin.