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MLM Legal

MLM companies and independent contractors (distributors) must understand the local, national and international laws that regulate the MLM and direct selling industry. In the United States, the direct selling industry is regulated by Federal Trade Commission rulings that influence commission plans or income claims. The sale of products is also regulated for all industries such as the three day return rate. In international legal cases, national and local laws vary.

  • October 12, 2015

    The FTC playbook: What happens when a company is shut down

    I am not a lawyer. This is just one lay persons view based on my years in the industry. When the FTC decides to make a case against an MLM company, their methods follow a consistent pattern or playbook. When the FTC decides to run their “playbook” against a company, I have never seen a company survive[1].... Read more ›

  • October 5, 2015

    The FTC Wins, You Lose. The FTC Loses You Lose.

    The response across the web to the court ruling on September 18, 2015 has been mixed. Some reporters have called it a “loss,” expecting the court to eventually declare Vemma a pyramid and shut them down for good. Many have seen it as a “win” for Vemma and for the industry, given the fact that no MLM i... Read more ›

  • September 29, 2015

    Refusal to define a pyramid

    Do you remember the invitations you have received to join a multilevel marketing company? You may have experienced both relationship building tactics as well as some less effective ones. What thoughts did you have when you evaluated if the opportunity as a pyramid scheme vs a legitimate direct selling company... Read more ›

  • September 23, 2015

    Back to the Breakaway?

    One of the key arguments in the recent Vemma versus the FTC case was about the use of personal volume (PV) requirements for compensation qualification. The FTC contends that compensation must be paid on the sale of product and not on recruitment. But if a company requires PV for compensation, it is unclear if... Read more ›

  • September 3, 2015

    FTC v. BurnLounge: Lessons Learned for MLM/Direct Selling

    FTC stated policy has been to prosecute egregious pyramid schemes as opposed to mainstream direct selling.  By and large, this has been the case since the famous 1979 FTC Amway unsuccessful prosecution. FTC and major court pyramid decisions, including FTC v. BurnLounge,  focus on front-loading, large inv... Read more ›