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Direct Selling News (DSN) recently posted the 2011 winners of the Bravo Awards. A round of applause goes to Amway, ViSalus and Nu Skin!
Doug DeVos, President of Amway, won the Bravo Leadership Award for putting people first. This includes Amway’s three million independent business owners. Direct Selling News offered the following statement as to why Amway and President DeVos were honored:
It is for this unwavering commitment to the people of Amway and his leadership role within the direct selling industry on the local, national and international levels, that Direct Selling News presented DeVos with the 2011 Bravo Leadership Award.
“Any time you’re recognized in your industry by your peers, it’s a tremendous honor,” says DeVos. “You want to be part of the team. So this is kind of like my teammates having a vote and saying ‘thanks’ in a very special way.”
ViSalus Science was honored with the Bravo Growth Award. The founders were honored for saving the company from certain death. The DSN stated:
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The Securities and Exchange Commission (SEC) shut down ZeekRewards.com for conducting Ponzi scheme activity. News outlets are reporting that ZeekRewards raised over 600 million dollars from over one million customers. Here are some links to the news reports:
SEC Shuts Down ZeekRewards as Scam – Wall Street Journal
U.S. SEC says shuts ZeekRewards.com $600 million Ponzi scheme – Reuters
Investors in Lexington Ponzi scheme confused, upset – Fox8
Read the official SEC Complaint [PDF]. Or, read the official SEC Complaint online (i.e. text only).
Be sure to visit the blog at MLMLegal.com to read MLM Attorney Jeffrey Babener’s article, And the Leaves that are Green Turn to Brown – MLM Penny Auctions, of ZeekRewards’ recent allegations and to learn more about illegitimate direct selling companies.
You may also be interested in reading the following articles which help to identify pyramid schemes vs. legitimate MLM companies:
Is it a Pyramid or Legitimate MLM?
Identifying Illegal Pyramid Schemes
Tired of reading? Attorney Jeff Babener will explain pyramid schemes to you on video:
The direct selling industry hasn’t proved to be as vulnerable to a down economy as other industry sectors. Fledgling and startup MLM companies are either flourishing or remaining economically consistent (see our recent blog post on the DSA’s – Direct Selling Association – Annual Growth & Outlook Survey for the latest U.S. direct selling industry statistics). Proof for this can be seen in the latest MLM industry headlines, but also in the growing pending member applications under review by the DSA.
Four new direct selling companies have applied for membership with the Direct Selling Association, announced in a recent DSA press release.
In June, Country Gourmet Home and Origami Owl applied for DSA membership and are under review. They are currently marked as “pending” members of the DSA.
In July, two more companies applied: ArtNest, Inc. and Jamberry Nails. Both are also currently sanctioned as “pending” members of the DSA.
A company must go under extensive review to become a member of the Direct Selling Association. The DSA states the follow requirements for membership:
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Representatives of the Dietary Supplement Industry have indicated they are pleased that the FDA plans to issue a “revised draft guidance on new dietary ingredients (NDIs) used in dietary supplements,” reported Nutraceuticalsworld.com. The FDA’s new dietary ingredients draft issued in July 2011 has been widely criticized as “a flawed attempt by the agency to reinterpret the NDI section of the Dietary Supplement Health and Education Act of 1994 (DSHEA).”
The American Herbal Products Association (AHPA) called for the FDA to withdraw its guidance stating that it would “increase the burden on the supplement industry…”
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The Direct Selling Association recently released its 2011 Fact Sheet which outlines how much the direct selling industry sold in retail sales from 2007-2011. In 2007, U.S. retail sales were $30.80; in 2008, sales were $29.60; in 2009, sales were $28.33; in 2010, sales were $28.56; and in 2011, sales rose to $29.87 billion. Although retail sales improved from 2010 to 2011, they have yet to reach sales figures achieved in 2007, which was just prior to the United States recession.
For more information on the direct selling industry visit www.mlmlegal.com. MLMLegal.com also offers up-to-date stock quotes for major MLM companies.
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The Consumer is King…or Queen
In Canada, they call it the Direct Selling Rule. In the U.K., they call it the Doorstep Selling Rule. Consumers have a right to cancel face-to-face transactions. In the U.S., rules regarding face-to-face selling are taken with equal seriousness. Networkers and direct selling companies must contend with an oddly named rule, the FTC Cooling Off Rule, every time they pull out a retail sales form. Why all this legal language, and who started it after all?
Although we have seen the last vestiges of the door-to-door salesperson, the direct selling industry was built on models such as “ding-dong Avon calling” or the Fuller Brush Man. Today, no one is home during the day, and it is very difficult to make this art form successful. That is not to say that the face-to-face connection is gone. It is just that it may occur in home parties, in home presentations, around the office lunchroom table, or over coffee at Starbucks.
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Direct Selling News has published the top direct selling companies in the world. Here is a list of the highest-selling top 20 companies, located in the United States, exceeding 100 million dollars in net sales.
$11.3 billion
$10.9 billion
$3.5 billion
$2.9 billion
$2.6 billion
$1.7 billion
Primerica Financial Services, Inc.
$1.1 billion
The Non-Recognition of Personal Use is a Disconnect from the BurnLounge Court Opinion and from FTC Positions on the Subject… It Creates an Unnecessary Cloud on the Business Model and Operation of Many Major Direct Selling Companies …
BurnLounge Opinion vs. Final Order Disconnect on Personal Use
By and large, the Court’s statement of opinion accepted the FTC position that BurnLounge was a pyramid. However, there was a disconnect between the opinion and the “personal use” language in the Final Order. In fact, the thrust of the opinion was not based on criticism of the sort of “personal use” by distributors so common in many leading direct selling companies. Instead, the thrust of the opinion was that the motivation for distributor purchases of “packages” was incidental to creating a market for company product or services; rather the true purpose for purchases was to buy into qualification for commissions in the opportunity … a classic allegation in pyramid schemes.
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FTC v. BurnLounge: 10 point mini-primer and action plan on the “personal use” issue:
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Overreach of BurnLounge Final Order creates uncertainty on “personal use” issue… FTC stated policy has been to prosecute egregious pyramid schemes as opposed to mainstream direct selling. By and large, this has been the case since the famous 1979 FTC Amway unsuccessful prosecution.
- FTC and major court pyramid decisions, including FTC v. BurnLounge, focus on front-loading, large investments, products and services that do not stand on their own in the marketplace, payment of recruitment commissions for purchases of nonconsumer items such as sales tools, unsubstantiated earnings claims and programs where the motivation for distributor product purchases is driven by intent to “buy in” and qualify for commissions in the business opportunity … and is incidental to a real desire for product or service for resale or personal use.
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