MLM
Companies adapt and innovate to satisfy modern customers and demanding regulators
By: Stephanie Ramirez
This is called the direct-selling business, not the direct-recruiting business. Companies are going to need to bring their leaders into the mix and explain that times are changing, so we’ve got to change and they’ve got to change or we’re going to be left behind.
— Mike Sheffield, Founder and CEO, The Sheffield Group
The unprecedented amount of scrutiny brought on by the FTC over the past year has many direct sellers scrambling to shore up policies as well as update and modernize their marketing practices and compensation plans.
The customer is king in this new era of direct selling, and while some legacy companies have remained steadfast with their current plans, new channel entrants are starting fresh out of the gate with unique hybrid models.
Whether it is incorporating affiliate programs or app-based retention tools programs into their model, embracing verified influencers, or constructing a business plan around corporate social responsibility, the direct sellers of the modern age are acutely aware of the importance of showing network marketing’s best face to both regulators and an often-critical public.
Her thoughts on the US launch of a global powerhouse and new ways of thinking about direct selling
Rachel Kellogg has spent over a decade in the direct selling industry, starting as a consultant in the field and working her way up to leadership. She joined the channel unexpectedly but fell in love with the way it gave an equal opportunity to all. After a successful 10 years in the field with Mary Kay, Kellogg was ready to take what she had learned to join the executive team at Faberlic as an integral part of their recent U.S. launch as national sales director. Her mission is to infuse a culture of love, inclusivity, and growth from the ground up and take Faberlic to No. 1 in direct selling.
Founded: 1997
Location: Moscow, Russia
Website: www.faberlic.com
Highlights from thought leaders’ Risk Roundup Columns of 2021
Regulators stayed busy in 2021, reminding direct sellers of the unique legal challenges faced by the channel throughout the year. Combined with the ever-increasing importance of addressing ESG and fraud risks facing the entire corporate landscape, we have selected the key insights and advice from our knowledgable contributors to keep SSN’s readers ahead of the curve. Please visit SocialSellingNews.com for the complete articles.
Commissioners outline an aggressive new strategy with direct sellers in their sights.
The Federal Trade Commission is in the midst of a sea change—a change in leadership, a change in ideology and a change in philosophy. Signaling the most significant course correction of the past 40 years, the Commission is reversing a self-imposed disarmament from the 1980s deregulation era while at the same time asking Congress to strengthen its powers under the FTC Act. This revitalized Commission has also released a target list, and direct selling is on it.
Women’s clothing company will pay $4.75 million to resolve pyramid suit
By: SSN Staff
Every Washington retailer who lost money under LuLaRoe’s pyramid structure will receive restitution.
—Bob Ferguson, Attorney General, Washington State
California-based direct seller LuLaRoe has settled with Washington State Attorney General Bob Ferguson to end a consumer protection lawsuit filed by the AG in January 2019. Ferguson accused LuLaRoe of violating the Washington Antipyramid Promotional Scheme Act and the Consumer Protection Act.
Experts fear other social platforms may follow
By: David Bland
The loss of TikTok as a potential tool for reaching the dynamic Gen Z market is a blow to the channel.
Most concerning is the prospect that TikTok’s decision will act as a bellwether for platforms more vital to the direct selling channel, such as Facebook and YouTube.
The social media platform TikTok took the direct selling channel by surprise in December 2020 when it announced a sweeping addition to its community guidelines that included a ban on multi-level-marketing content. It is the first online social platform to place an outright prohibition on direct selling and MLM activity.
Regulators warn enforcement is a ‘top priority’ at a recent industry conference
By: David Rauf
“I caution you to stay on the straight and narrow because now, more than ever, this is a top enforcement priority for me, and I hope, the agency.”
—Noah Phillips, Commissioner, Federal Trade Commission
A commissioner with the Federal Trade Commission (FTC) voiced a tough message for the direct selling community at a recent online event, saying the regulatory agency will remain aggressive in its approach to policing the channel.
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