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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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.
Read more on A NEW LEGAL WEAPON FOR YOUR MLM COMPANY…
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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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By: Scott Warren, David Van Sambeek, Scott Wellman*
There has been a recent surge of enforcement actions by governmental agencies claiming that that certain network marketing companies are illegal pyramid schemes. The most notorious of these recent actions is the action filed by the U.S. Federal Trade Commission (FTC) against Vemma. But this is just one of the actions and investigations brought by both the FTC and the U.S. Securities and Exchange Commission in recent time. In order for your MLM company to avoid the same fate and regulatory scrutiny, it is essential that you (1) gain an understanding of the crucial role retail sales play in the determination of what is a legitimate MLM company versus what will be considered to be an illegal pyramid scheme, and (2) implement any needed changes immediately.
Read more on Legitimate MLM Company or an Illegal Pyramid Scheme…
In a crushing defeat for MonaVie, an arbitrator in Utah has ruled that MonaVie must pay a former MonaVie distributor $1,215,000 plus cost for wrongfully terminating the distributor’s contract and for breaching its duty to act fair and in good faith.
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Since our founding in 1982, Wellman & Warren has served as the authority in business litigation matters involving multi-level marketing issues. We specialize in four practice areas that include: cross recruiting, non competition violations, breach of contract and policy and procedure violations.
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