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Andrew Smith

FTC Puts Channel on Notice
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FTC Puts Channel on Notice

Direct sellers’ earnings claims and testimonials under scrutiny

By:  David Bland

I think the FTC’s current aggressive posture is that they are trying to hold high-level executives liable for the actions that happened at a very low level, across a broad array of businesses—not just multi-level marketing or even the earnings claims area.

—Maureen Ohlhausen, Former Acting Chairman
(2017 to 2018), FTC

The Federal Trade Commission (FTC) issued its third Notice of Penalty Offenses in as many weeks on Oct. 26. After putting 70 for-profit colleges on notice earlier in the month for making deceptive claims regarding graduates’ job and earning prospects, followed by a Notice to 700 national advertisers about misleading endorsements, testimonials, and fake product reviews, the Commission turned its focus to companies that offer money-making opportunities. 

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December 1, 2021 0 comment
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Direct Selling Critics, Old and New, Join Regulators at Caustic 2-Day Conference
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Direct Selling Critics, Old and New, Join Regulators at Caustic 2-Day Conference

Organizers block channel representatives from contributing

By:  David Bland

There were a number of factors that led us to think that the timing was right for this type of conference, including indications from the Federal Trade Commission that they are tightening focus on the MLM industry.

—Douglas M. Brooks, Attorney

Anti-MLM influencers appear to be more interested in fostering a cottage industry of their own than they are to an inclusionary dialogue on how best to promote entrepreneurship.

—Direct Selling Association

For decades, direct selling’s opponents have worked to challenge the channel from the relatively confined spaces within their respective legal, academic and media circles. 

The occasional high-profile court case would generate publicity for a few news cycles, and newspaper and magazine articles would follow with passing coverage. 

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June 1, 2021 0 comment
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ComplianceLegalRisk Roundup

FTC Maintains Pressure on Compensation Plans

Direct sales companies should prepare for a new wave of regulatory actions

By:  Brent Kugler, Guest Contributor

Companies should take the time to consider if their plans hit the guardrails laid out by the most recent statements and actions of regulators.

Like it or not, the legal requirements for multi-level-marketing (MLM) compensation structures have changed in recent years. Many existing comp plans used by direct selling companies for years may now, if challenged, be considered non-compliant by the Federal Trade Commission (FTC). Indeed, comp plans considered to be compliant as recently as two years ago may today run afoul of the FTC’s latest criteria for evaluating compensation structures.

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March 1, 2021 0 comment
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Cover StoryDirect SellingFeatures

FTC Launches Nationwide Crackdown on Income Claims

More than 50 enforcement actions taken in ‘Operation Income Illusion’

By:  Jennifer Mills

On Dec. 14, the Federal Trade Commission (FTC), along with 19 federal, state, and local law enforcement partners announced a nationwide crackdown on “scams that target consumers with false promises of income and financial independence,” which, they say, have been particularly rampant during the pandemic. 

The regulatory agency initiated four new enforcement actions and one new settlement alleging deceptive income claims in violation of the FTC Act and noted that these actions are part of its broader initiative “Operation Income Illusion,” intended to dramatically increase claims enforcement. 

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January 1, 2021 0 comment
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FTC Issues Warning Letters to Direct Sellers
Cover StoryDirect SellingFeatures

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
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