Moving Forward, Here’s What the FTC’s Order Requires Herbalife to Do

Kevin Thompson Shares His Legal Insight To The Herbalife Settlement

Herbalife

After a two year investigation, Herbalife has agreed to pay a $200 million fine to the FTC and act in accordance with prescribed measures. With this morning’s announcement of a settlement, investors and proponents/opponents of the MLM industry alike are attempting to process what it all means for the Company’s future. Before we provide you an in-depth analysis of the stipulations found within the FTC’s Order for a Permanent Injunction and Monetary Judgment, it’s important to remember that these prescribed actions only apply to Herbalife and not multi-level marketing companies collectively. In response to a question in which she was asked what kind of implications the settlement will have on the network marketing industry , FTC Chairwoman Edith Ramirez stayed mum on its long-term implications and stated rather plainly that the FTC would soon be providing additional guidance on legitimate network marketing companies. That aside, let’s get down to business and clarify what the FTC’s order does and does not say.

THE BIGGEST TAKEAWAYS

Macro Perspective

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Crowdfunding and Network Marketing: Part II

Thomas Ritter Explains Title III Of The JOBS Act For Direct Selling

monopoly

In Part 1 of the crowdfunding series, I discussed the rise of the crowdfunding phenomenon and Title III’s recent enactment under the JOBS Act. While Title III may appear to be an attractive avenue  of capital fundraising for entrepreneurs and startups, founders of a network marketing company may find it a boardwalk littered with more stops than gos. As for crowdfunding as a MLM product service or offering, in my opinion, its a chance to go directly to jail. 

TITLE III CROWDFUNDING AS WAY FOR MLMs TO RAISE CAPITAL

If you remember, the benefits of a Company looking to use Title III appear numerous. Title III provides the ability to raise up to $1 million without having to deal with burdensome SEC requirements. For an MLM looking for startup funding, what’s not to like?  Well . . . er, money for one. The logic goes something like this: you have to have money if you want to raise money.

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Use of Provisions to Limit a MLM Distributor’s Claim for Damages

What Is A Wrongful Network Marketing Termination?

termination

When a distributor is terminated by his or her MLM company, he or she may claim breach of contract and seek recovery of his or her past and future commissions. After all, the distributor may have worked for months or years to build up his or her downline only to have its income stream summarily stopped and taken by the company.

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Need a Financial Jolt? Get a JOB(S): Part 1

Reward-Based Crowdfunding Network Marketing Companies Are They Legal?

Thomas

The term “crowdfunding” has been thrown around a lot over the past several years. But what does “crowdfunding” really mean? And how does crowdfunding, particularly the recent enactment of rules from Title III of the JOBS Act, relate to network marketing? 

At its most basic, crowdfunding is the pooling of financial contributions via the internet for a project or enterprise.  The ubiquitous nature of the term has led to a great deal of confusion. However, “crowdfunding” is most easily understood as an umbrella term referring to three different models for raising capital: donation-based, rewards-based, and equity-based. Before discussing the challenges more commonly associated with equity-based donations, let’s cover the more commonly known types of crowdfunding.

DONATION AND REWARD-BASED CROWDFUNDING

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The Federal Anti-Pyramid Law (Summary and Analysis)

The MLM Attorney Provides A Legal Analysis On Federal Anti-Pyramid Law

MLM Attorney Kevin Thompson

Congressman Marsha Blackburn, House Representative of the 7th District of Tennessee, has proposed the Anti-Pyramid Bill Federal that aims to clarify the differences between pyramid schemes and legitimate network marketing companies. If you’re connected to the network marketing industry, whether as a distributor, executive, vendor or owner, the importance of this bill (or a modified version of this bill) is vitally important.

The Need for Clarity

As many of my readers know, I have aggressively advocated for almost a decade for the need to create cleaner guidelines in the industry. The “ocean of gray” that has separated legitimate direct selling from pyramid schemes has predictably led to some very serious challenges. As I accurately predicted in my first e-book titled “Saving the industry by defining the gray,” the fuzzy lines that distinguish legitimate and illegitimate network marketing has greatly contributed to today’s problems. In an environment with ample wiggle room, pyramid schemes can operate under the guise of legitimate network marketing. Zeek Rewards, notable ponzi scheme, did this better than all others. The veneer of legitimacy offered by legitimate network marketing allowed Zeek to amass tremendous influence and inflict significant harm. This, in turn, affects the entire profession.

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A NEW LEGAL WEAPON FOR YOUR MLM COMPANY

Wellman & Warren Share Legal Perspective To Protect MLM Distributor List

lawyers

Most Multilevel Marketing companies claim that their list of distributors is a proprietary asset of the company. When a departing distributor uses the list to solicit other distributors to follow him or her to a new company, the MLM company cries foul ball. Indeed, many MLM companies include in their Policies & Procedures provisions acknowledging the proprietary nature of the company’s distributor list (i.e. genealogy) and providing restrictions allowing use only in conjunction with the company’s business.

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Wellman & Warren defends FTC investigation of MLM Company

Not All FTC Investigations End With The Government Winning!

Angle Of Justice

Wellman & Warren, LLP has, once again, successfully defended a Federal Trade Commission (FTC) investigation of a Multi-Level Marketing company. Due to the private and confidential nature of the investigation, Wellman & Warren is not able to disclose the names of parties involved in the investigation. The FTC’s investigation centered around the methods in which the company paid commissions to their distributors as well as various income claims made by the company and their distributors.

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