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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We are often asked a question about the past and the future of direct selling, network marketing and the FDA. It’s a good question because so many major players in our industry, ranging from Herbalife to Nikken, to Melaleuca to Amway, are driven by health products and dietary supplements. The direction of the industry has generally been a very good one. Until the mid-1990s, companies were very concerned about what health claims they could make about products. It came to a head in 1994 when the FDA’s strictness regarding claims became so difficult that Congress almost unanimously passed a bill called “The Dietary Supplement Health Education Act (DSHEA)” of 1994, which recognized the importance of providing health information to the consumer so

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Expert MLM Attorney Jeff Babener has just released a new video titled Unauthorized Medical Claims and FDA Issues. In the video, which took place at an MLM company compliance training event, Attorney Babener discussed the harm that can come from distributors who make unauthorized medical claims about the products that they sell.

Unauthorized medical claims, such as selling a product based on its ability to “cure cancer” is harmful to customers, the company and other distributors. Mr. Babener discusses the FDA’s perspective and the ramifications of making false claims, one of which is bringing harm to oneself and others. Watch this video to learn what claims you can and cannot make about the products you sell.

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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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From Nothing to Everything

At first, a trademark may be the least valuable of assets.  Famous marks such as Coca-Cola, Microsoft or IBM were nearly valueless at one time. However, for a mature company, the brand name may be its single-most valuable asset. Valued names such as GE, Disney or Intel add billions of dollars to the balance sheet.

Similarly, there was a time when the names Avon, Mary Kay or Tupperware had little or no value.  And yet decades later, the goodwill associated with those direct selling brands would allow their products, if the companies so chose, to be sold in any retail venue in the world.  As they say, “mighty oaks from small acorns…..”

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MLM News Headlines:

WASHINGTON, May 09, 2012 (BUSINESS WIRE) — As the association representing more than 200 leading firms that manufacture and distribute goods and services sold directly to consumers, the Direct Selling Association (DSA) would like to set the record straight in response to questions raised about the direct selling business.

Unfortunately, even though these questions have been asked and answered many times by the direct selling industry over the years, stock prices of Herbalife and other publicly traded direct selling companies fell as a result of inquiries by hedge fund manager David Einhorn.

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Take a look around at the health industry. Natural health products are everywhere. Herbs and dietary supplements have gone mainstream in the last 20 years. The MLM industry accounts for a very substantial portion of sales of nutritional products.

Distributors are often perplexed as to what they can say about the dietary supplements they sell. The answer can be found in federal legislation, adopted in 1994, called DSHEA, the Dietary Supplement Health Education Act.

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