Who Owns the Downline? What is Stealing?

There are a lot of good aphorisms and jokes MLMers tell about ourselves. One that I especially like—often told by MLM.com blogger and industry attorney Jeff Babener—goes something like this:

The difference between an MLM professional and an MLM crook is that a professional is someone who can get another company’s distributors to join your company. An MLM crook is someone who sponsors your distributors into another company.

The point is that whatever the product or the compensation plan, we all are recruiting from essentially the same gene pool of experienced, professional Distributor field leaders.  And point of view as much as ownership qualifies the character of the sponsor.

But now a federal judge has taken a stand on whether or not doing so is ethical and/or legal.

According to Tom Harvey, writing in the Salt Lake Tribune, a federal judge

“turned down Utah-based MonaVie’s request for an emergency order prohibiting a former top distributor from posting information on Facebook about the new multilevel marketing company he has joined. U.S. District Judge Clark Waddoups ruled at the end of a 4½-hour hearing that MonaVie…had failed to show that Joseph Licciardi had likely violated policies of the company.”

If it’s social, is it legal?

Most companies prohibit the use of their genealogical records from being used to recruit to other companies. But what about social media? What about someone posting an ad on her or his Facebook page advertising where they are going and why? There is no question that such a strategy—soliciting “friends” from your Facebook page and the pages of your other friends—may be even more effective than pulling out your genealogy and telephoning what may be thousands of distributors.

And according to the lawsuit filed by MonaVie, that is precisely what one of its top 30 distributors has done; a guy who in 5 years with MonaVie earned commissions exceeding $4.4 million! And where do you suppose most of the “friends” on his social media sites came from?

How “independent” is an independent distributor?

MonaVie knows it can’t prohibit Distributors from joining other MLM companies, even if they choose to continue as MonaVie Distributors. (To do so could cause regulators to rule that the company has violated the independent status of the Distributor and turned her or him into an employee, an outcome that would be even more onerous to MonaVie than having one of its top field leaders defect.) But in an April 30 letter, MonaVie accused the Distributor of violating its policies by using his Facebook page to cause Distributors from his downline to join another company.

The court has disagreed. The judge argued that the language of the MonaVie policies and procedures is too broad to be enforceable. Which should be a warning to other MLMs who traditionally have tried to throw as wide a net as possible to prohibit this kind of solicitation.

Who are one’s “friends”?

The court ruled:

“There is no indication this was an attempt to contact distributors of MonaVie and convince them to join” another company.

Really? (Whataya wanna bet the judge never built a downline?)

And precisely who did the court think would read the posting and be interested in getting into the Distributor’s next deal? People unknown to him who know nothing of his reputation and accomplishment and just stumble over it on the internet? Maybe family members who probably are still telling him how crazy he is to be in MLM?

The Distributor argues he left MonaVie because the company has modified its compensation plan numerous times since he joined in 2007, “significantly” reducing his commissions. Which may be true. All MLM companies from time to time modify their comp plans. All of them have statements in their policies and procedures permitting them to do so. And every time they do—no matter the justification or the reason—Distributors think they’ve been robbed!

But come on! This guy made nearly a million bucks a year in the 5 years of his “significantly reduced commissions”!

I’m not saying he didn’t earn every penny of it (anybody who knows MLM knows that building a million-dollar business takes more than luck and fairy dust!). I’m just wondering: precisely how much more does he think his time and talent should be worth?

I know what MonaVie’s opinion is: he got everything he deserved.  But because of the court, he will not now get what he further deserves, which is to be disciplined!

Sign of the Times

In the meantime, the days of companies thinking they can own their distributor base may be coming to an end. If a talented social networker can use her or his skill to solicit at will the “friends” they have garnered over time from their distributor organization, how much more effective is that likely to be than the traditional conference calls and other “arms-length” campaigns typically run by distributors not wanting to walk away from organizations they believe they own?