MLM FTC Ruling Misses The Mark

by Kurt on

MLM FTC Ruling Would Have Help Protect New Business Builders

MLM FTCLast month, a ruling by the FTC that was intended to help people from unscrupulous practices of those in the Direct Selling industry was passed.  Essentially, it would have required those MLM companies to required confirmation and present to new business builders a “one pager” of information such as proof of income claims, and any other legal action that the company itself might have been under.

However, as reported in the Bloomberg Business Week

But the FTC rule, which went into effect last month, excludes so-called multi-level marketers (MLMs) such as Amway, Avon , and Tupperware  that the agency originally intended to regulate. That’s because of intense lobbying from the industry, whose revenues are some $28.5 billion in the U.S., according to the Direct Selling Association, the industry’s trade group.

Does The FTC Need To Regulate MLM Companies Like This?

What i find most interesting about the whole thought is that why would MLM companies be against such action?  As long as I’ve seen and been involved in the industry, I’ve honestly seen a good number of companies and distributors completely miss-represent income claims and even more deceptively, miss-represent their products as financial investing alternatives, make false claims, especially without any kind of rigorous study, about health benefits, you name it.

I do find it understandable that an industry would balk at any additional requirements, as for the most part, they feel they can police their own, but on the same tolken, the article also reports that Amway paid out $55 million dollars in settlements in California last year to settle a class action lawsuit.

Personally I’d be all in favor of some kind of a one-pager disclaimer being required, as it would separate many legitimate companies from those with unscrupulous business practices.

Equally as important, it would take some of the exagerated income claims and silence them.

What do you think about a one-pager such as this for distributors if an MLM FTC ruling like this ever came into enforcement?

Leave a Comment

Previous post:

Next post: