The bad news seems to keep piling up for Multi Level Marketing companies. There was the Zeek Rewards fiasco where the US Securities and Exchange Commision alledged that the company was both a ponsi and pyramid scheme. Back in August, 2012, distributors lost the opportunity and for most of them their investment too, but it was also a significant blow to the industry. The news of the illegitimate business dealings were made main stream when USA TODAY ran the story http://usatoday30.usatoday.com/money/industries/brokerage/story/2012-08-17/zeekrewards-ponzi-scheme-alleged/57123372/1 as well as the Wall Street Journal http://online.wsj.com/article/SB10000872396390443324404577595773662395922.html, Huffington Post http://www.huffingtonpost.com/2012/08/17/federal-officials-allege-_n_1799728.html and CNN http://money.cnn.com/2012/08/17/technology/zeek-rewards-ponzi-scheme/index.html.
Next, AVON and other skin care companies where in the spot light. In October, 2012 CBS reported that, “Government regulators are calling out Avon and other cosmetics companies, accusing them of making product claims that go too far. The Food and Drug Administration has sent warning letters to at least four companies, including cosmetic giants Avon and Lancome, threatening to block sales or even seize their products if they don’t tone down their ads.” Read more http://www.cbsnews.com/8301-505269_162-57534835/fda-accuses-avon-lancome-other-cosmetic-companies-of-making-ad-claims-that-go-too-far/
In 2012, their seemed be NO imunity and Herbalife was throw to the wolves too. Allegations made by hedge fund manager Bill Ackman alleged that Herbalife as just another ‘pyramid scheme’. You can learn about the allegations in the CNBC Special Report, http://www.cnbc.com/id/100359541. This attacked spooked investors and prospects alike and helped to fuel an ever darkening cloud over the Network Marketing Industry as a whole. The shock waves of these allegations continue to be felt throughout the industry as consumers and distributors alike consider the legality of MLM in general.
So, is your company next? The Federal Trade Commission says that a company only qualifies as a pyramid scheme if its salespeople are paid primarily on the basis of recruitment, as opposed to the sale of a retail product or service. This week, a complaint was filed by the FTC and the state attorneys general and another MLM was ‘shut down’. Fortune Hi-Tech Marketing, the defendant is be accused of falsely claiming consumers would earn significant income for selling the products and services of companies such as Dish Network, Frontpoint Home Security, and various cell phone providers, and for selling FHTM’s line of health and beauty products. It is alleged that, despite FHTM’s claims, nearly all consumers who signed up with the scheme lost more money than they ever made. To the extent that consumers could make any income, however, it was mainly for recruiting other consumers, and that FHTM’s compensation plan ensured that most consumers made little or no money, the complaint alleged.
“This is the beginning of the end for one of the most prolific pyramid schemes operating in North America,”
Kentucky Attorney General Jack Conway said. “This is a classic pyramid scheme in every sense of the word.
The vast majority of people, more than 90 percent, who bought in to FHTM lost their money.”
If you are in Direct Sales, you can not help but wonder, “who’s next’?
Will your company be next?
Will all the ‘bad press’ impact your business?
IS THERE A SILVER-LINING?
Good Press is on the way! Way back in 2009 AVON paved the way, with their ‘Do What I Do’ Superbowl Commercial. Actually, the 1st AVON Superbowl Commercial was way back in 1971! Wow! Talk about spreading the good word. I can’t wait to see how they will lift up the industry and their distributors this year and this heavy hitter is NOT alone! Plexus Slim, a younger MLM is doing their part. In Scottsdale, AZ their billboard can be seen by motorists traveling on one of the Cities busiest freeways. Last, January, Isagenix had an interview on the popular TCL show, “Hears to Your Health that lent credibility to all the supplement and weight loss MLM’s. And Dr. OZ! Oh, what a man. What he has done for MLM! Nu Skin, USANA, Jeunesse, and many more MLM’s need to send him a Thank You note. One should also go out th Mary Kay, who runs commercials year round, shinning a bright light on not only themselves but the strengths of the industry.
THANK YOU! If you give MLM a “Good Name” Thank You! Direct Sales is an amazing opportunity that is often overlooked and or scrutinized It’s million’s, yes million’s of distributors will continue to stand together and support the industry in their own way for many years to come.
This is not the end of MLM! Just ask any distributor with a dream, YOU AIN’T SEEN NOTHIN YET!