We are demonstrating to the FTC and the regulatory authorities that we prioritize compliance in our companies.” —Brian Bennett, Vice President of Government Affairs and Policy, DSALast summer the Direct Selling Association (DSA) began work on a comprehensive compliance program which will be available to both member and non-member companies.
The FTC has taken the position that the injunctive relief permitted by 13(b) allows it to disgorge revenue from scammers and corporations as well as regain restitution for victims.
“There’s an existing process outside of 13(b) for the FTC to pursue monetary relief, but it is cumbersome and requires more due process, which is why the FTC doesn’t like it.” —Larry Steinberg, Chair, Multilevel Marketing Industry Group, Buchalter
This could dramatically affect the relationship between the direct selling industry and the FTC. —Larry Steinberg, Chair, Multilevel Marketing Industry Group, BuchalterThe U.S. Supreme Court has agreed to decide whether the Federal Trade Commission (FTC) can continue to seek monetary rewards when it sues scammers and firms accused of deceptive business practices, setting the stage for a ruling that will have wide-ranging ramifications for the direct selling channel.
If (the McDaniels) were to prevail...they potentially could resolve their litigation with the FTC without an injunction that prohibits them from participating in MLM activities. They may also not have to pay any money at all.
No other court has aligned with the Seventh Circuit thus far in curtailing the FTC’s enforcement authority by foreclosing its ability to obtain restitution.At the press conference announcing the AdvoCare settlement, FTC Bureau Director Andrew Smith commented on the consent’s ban on multi-level marketing but noted that “every case is different.” He pointed to the Herbalife consent order, by way of example, and stated that the company did not agree to abandon multi-level marketing altogether but instead agreed to certain protections that the FTC believed addressed consumer harm.
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