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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.

  • 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 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 ›

  • July 9, 2015

    FTC Policy Statement Regarding Advertising Substantiation

    FTC Policy Statement Regarding Advertising Substantiation On March 11, 1983, the Commission published a notice requesting comments on its advertising substantiation program.1 To facilitate analysis of the program, the notice posed a number of questions concerning the program's procedures, standards, benefits... Read more ›

  • July 8, 2015

    Third Party Marketing Materials and Product Substantiation

    Every few years, someone makes front page news with a scandal about an exaggerated or unsubstantiated claim about their product. Typically, some crisis comes first such as Swine Flu. Next, someone decides that their product will fix said crisis. Making headlines can be great for business, but not these kinds ... Read more ›

  • July 6, 2015

    Product Substantiation: Direct Selling’s Key to Success

    The key issues in nutritional supplements are (1) that products have substantiation for their claims, (2) that consumers have information about the nutritional supplements, and (3) that products contain the ingredients listed. Substantiation Substantiation matters. That is, scientific proof for the effi... Read more ›

  • June 9, 2015

    You’ll Pay Millions in Fines if You Violate These Rules by Jennifer Fong and Spencer Reece

    If you are in a direct sales or network marketing company, your policies and procedures forbid product claims. Don't believe me? Go read 'em. Trust me, it's in there. OK everyone, this is really important, so put down whatever you’re doing and listen up.  I’m giving you my *serious eyes.*  I mean it,... Read more ›