This blog post is a companion post to the video: Debunking Direct Selling Industry Myths

Over the years some very interesting myths have occurred. Usually, they are generated by over-enthusiastic, well-meaning distributors and perpetuated by the same sorts of individuals. One such myth is that within the next ten years, 95% of all the products that will be moved and sold in the United States will be through MLM.

Another common myth is that MLM is such a powerful method of marketing that the business schools have chosen to feature it as the chief business model of the future. And yet another myth, schools such as Harvard and Wharton now teach MLM, which they don’t. However, direct selling has its place in the education system and there have been significant case studies that have been done and corporate America is clearly discovering the benefits of MLM.

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Hi. I’m Jeff Babener and welcome to our blog. There are some basic things that you need to be willing to do in order to be successful in network marketing. Are you doing the basics? Is your downline doing the basics? Are you prospecting people who are willing to do the basics to succeed?

To answer these questions, here is a list of what must be done to become a successful network marketer: 1) Meet People. This is a people business. To be successful in network marketing, you have to let your hair down and mix it up with other people. The only way you’ll make sales, or find recruits for your sales organization is to get out there and rub shoulders. If you’re not a people-person, this business probably isn’t working for you. So, I would encourage you to learn and develop your people skills.

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Expert MLM Attorney, Jeff Babener, discusses how companies should handle discussions about compliance with their distributors. It is important for direct selling companies to be clear about what claims/statements distributors, consultants, members, representatives, etc. can and cannot claim about their earnings and products.

Interviewer: What I want to do now, Jeff, I want to turn our attention to compliance. Because this is an important key issue for any company, for any business owner, for any consultant or distributor, to know that their business is compliant. What would you say are, in your mind, the top issues regarding compliance that someone needs to be adhering to in order to make sure that they themselves are being compliant in the marketplace?

Jeff Babener: Okay. Well, maybe we ought to talk about this issue from the perspective of the company and from the perspective of the distributor. But in fact they’re one and the same. We have two goals: one is to help make them successful, and secondly, to help keep them in business. We’ve represented a lot of the leading direct selling companies. We’ve helped to start a lot of MLM companies.

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Interviewer: Jeff, let me ask you this question, what’s the difference between a legitimate direct sales opportunity and a pyramid scheme?

Jeff Babener: If you’re selling a product or service and it stands on its own in the marketplace and people would buy it because they want it, then you have a real, legitimate direct selling company. If on the other hand, the quality of the product is low, the price is high, then it merely becomes an excuse for people to buy the product because they want to qualify for the program in order to recruit others, make money, and earn commissions.

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Why there are Consumer Protection Laws and how they Affect Distributors

Millions of individuals who are going into network marketing are doing so part time. Generally, they are amateurs. They are not professional sales people. They are not manufacturer’s representatives. They are not going to be employed by the company, and therefore, they are viewed as the vulnerable purchasers of an opportunity. And that’s why the opportunity, the business, is regulated by consumer protection statutes; to protect the distributor, the amateur, who is about to be involved in a business.

Making Unauthorized Medical Claims and the FDA – Why Distributors Cannot Make Unauthorized Medical Claims

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Start the New Year off right! If you are starting or running and existing MLM, direct selling, network marketing, party plan company and need the help of industry experts, you should attend the Starting and Running the Successful MLM Company Conference. Hosted by industry expert Jeff Babener in Las Vegas February 21 & 22, 2013!

The MLM Startup Conference introduces executives of MLM companies to MLM industry experts in the areas of:

– Legal

– Software

– Capitalization

– Recruiting

– Technology

– Ecommerce

– Sales

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CNBC Senior Stocks Commentator, Herb Greenberg, evoked the expertise of leading MLM attorney, Jeff Babener, in the Commentator’s blog post “How Multi-Level Marketers Dodged a Bullet.”

CNBC – January 9, 2013

In his article, Commentator Greenberg discussed the effect lobbying dollars spent by the Direct Selling Association (DSA) and Herbalife assisted in the exclusion of consultants from the Business Opportunity Rule, enacted by the Federal Trade Commission (FTC).

Attorney Babener’s (editor of www.mlmlegal.com and www.mlmattorney.com) widely read article titled “The New FTC Business Opportunity Rule – MLM/Direct Selling Exemption Recognized” was quoted saying:

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From a legal standpoint, you are an independent contractor because the company does not tell you when, where, and how to perform your tasks. If it did, you would be an employee. Adopting guidelines on ethical issues, consumer legal safeguards, and general rules for fair competition among distributors does not negate independent contractor status. Independent contractor status generally means that individuals are liable for their own income taxes, unemployment insurance, worker’s compensation, etc. In 1982, the federal government specially recognized independent contractor status of direct sellers, and many states have followed suit with specific legislation.

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The question below is taken from one of Mr. Babener’s client’s distributors’ Q&A pamphlets:

Q: My friends and relatives often ask me if direct selling/MLM/network marketing is a “real business”… I would like to give them something meaningful to consider … your take?

A: People have always asked that question… and it is a fair question. Keep in mind we have nearly 16 million people in the United States selling consumer products and services in the range of $30 billion and more than 90 million people around the world doing this with sales exceeding $150 billion. This activity penetrates the fabric of our society. Earlier statistics, presented by the Direct Selling Association, have indicated that, perhaps, one in ten households have somebody who is doing this part-time.

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There aren’t special network marketing laws regarding divorces. The same laws that regulate dissolutions of marriage in each state regulate the fate of a distributorship in a divorce situation. In court proceedings, valuations are placed on the distributorship just as other assets are valued. Network marketing companies, however, commonly ask distributors to inform the company who will be the successor distributor after a divorce.

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