The harm is that you could lose your distributorship and you could place your company in jeopardy with the FTC. And if your company goes down, so does your distributorship. That’s the harm.
You may think that because you’re an ‘independent’ distributor you do not have to read, understand and follow all the guidelines and restrictions placed on you. You are not independent or exempt from the law.
You may think that because Facebook and Twitter and YouTube are such fun places you can post and say whatever you want.
If you think that, you are wrong and you can do great damage, not just to yourself, but to thousands of others who will be affected when your company is taken to task or taken out by the FTC for allowing you to do and say what you want.
In every other part of our lives, we are governed by strict rules to protect ourselves, our families, our employers and employees, our companies and the public. Why should that be any different in network marketing? Let’s all grow up and read the rules. Then let’s grow up some more and abide by them.
Start with your Policies and Procedures. Every good MLM contract we’ve read forbids enticement of any kind.
Grimes and Reese is a well respected law firm providing legal services to dozens of direct selling and network marketing companies. Click here for their powerful article about what we CANNOT SAY OR DO.
Direct sellers MUST understand that they are responsible for all the social chatter that goes on. The FTC has made it clear in its testimonials and endorsements guidelines that it will hold a business responsible for statements and representations made by anyone with a “material connection” to a company. Guess what – your distributors definitely have a material connection to your company, and you are responsible for what they are saying!
What does this mean to you?
If your company is responsible and intends to stay in business for the next hundred years, it will have a compliance department keeping an eye open for any distributor violating any law. They usually contact you politely to ask you to remove any non-compliant material or cease any non-compliant behavior like flashing checks or making illegal product claims.
If you do not comply, you should and will be terminated. The company must protect itself for the greater good – the future of all distributors, owners and management.
The company knows that the FTC will not take the time to prosecute individuals. The FTC will prosecute the company to eliminate the problem in the most efficient way. Taking out the company will take out the offending distributors.
Early in 2013, the FTC moved against and shut down Fortune Hi Tech Marketing. Among the evidence used against FHTM, the FTC cited the following (from the Grimes and Reese article):
- A Tweet wherein an FHTM distributor allegedly states: “bring ur friends & learn how 2 make $100K a YR.”
- Photos of a check presentation ceremony
- Distributor photos of their commission checks
- A claim by a top level FHTM distributor on Twitter that he made more than $5 million through FHTM.
Are we starting to get it here? If you are a serious business builder and not a hobbyist or scammer, let’s work together to stop this moronic behavior that gets us all into trouble and gives the industry a bad name.
Enticement is illegal and should be eliminated.
Paul Orberson of FHTM defied the law for years, and was taken down in 2013. Don’t let your company be next. If you see non-compliant behavior, don’t hesitate to report it to your compliance department. Your future is at stake.
If you want to learn more about the good, and how to avoid the bad and the ugly in our industry, you’ll want to read this free report – Big MLM Lies. You’ll be happy you did!