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MLM Scams and Legal News

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.

Editor's Picks

  • January 14, 2019

    China 2019: Still Open for Network Marketing Businesses

    Despite gloom in the global economy and fears of a US-China trade war, growth in China’s retail sales (and direct sales in particular) remain robust.   Chinese culture lends itself to the proliferation of network marketing models as it is very much a network culture where word of mouth marketing is kin... Read more ›

  • May 28, 2018

    What you need to know about buying and selling supplements

    Nutritional supplements are big business. According to Statista, Americans spent $36.1 billion dollars on retail nutritional supplements in the year 2017. But traditional retail isn’t the only way that consumers buy supplements—the direct selling industry provides many high quality and unique nutritional ... Read more ›

  • April 16, 2018

    Boosting transparency to save direct sales

    Podcast episode 24

    Spencer Reese joins us again to talk about the current legal climate for MLM companies. He talks to us about the evolving definition of inventory loading, the dangers of illegal income claims, and the surprising absence of pyramid scheme allegations in recent FTC actions against direct sellers. Spence... Read more ›

  • April 9, 2018

    How to avoid joining a scam

    Tips for differentiating legitimate direct sellers from pyramid schemes

    First-time MLM distributors often wonder if the company they’re thinking about joining might be a scam. Unfortunately, some companies claiming to be legitimate MLMs are pyramid schemes. But many MLMs are legitimate businesses. So how can you tell the good from the bad? It’s not a bad idea to Google the... Read more ›

  • September 11, 2017

    A Castle Built on Sand

    Challenges and opportunities for network marketing in China

    This article was written by Mark Schaub (International partner), Atticus Zhao (Senior associate), and David Hong (Foreign law consultant) and reposted with permission. China is the promised land for many international network marketing companies. China has what network marketing companies thrive on: co... Read more ›

  • March 26, 2017

    Eight Tips for Avoiding Legal Battles

    No one can tell you with certainty how keep your direct sales business out of the crosshairs of regulatory bodies. No two rulings (or settlements) are identical. As circumstances change, regulators change their focus. But we see regulators going after certain practices again and again, and from that we can dr... Read more ›

  • October 31, 2016

    Herbalife, inventory, and personal consumption

    Legal action taken against any MLM catches the industry’s attention. Company owners find themselves perusing court documents, studying the details, and trying to identify takeaways about the legal climate. The recent Herbalife settlement leaves us with many takeaways. One of them is a new and perplexing app... Read more ›