Direct Sales and MLM

Oprah’s Production Company Sues MonaVie

By
Kevin Thompson

< class="alignleft" src="http://tsfiles.files.wordpress.com/2008/09/oprah.jpg" alt="" width="282" height="187" />Last week, Oprah's production company, Harpo productions, filed a lawsuit against more than 50 companies alleging those companies had used their names and images to sell beauty products and dietary supplements containing acai and resveratrol without permission. See below for the actual lawsuit. Among those companies was MonaVie, a prominent network marketing company that sells acai juice products. In the lawsuit, the Plaintiffs spend little time stating their claims against each individual defendant. In general, they reference credit card fraud, fraudulent use of meta tagging for search engine optimization (which is way over my head), and unauthorized use of copyrighted works. They main thrust of their argument is found in the allegation below:These Defendants are willfully capitalizing on Plaintiffs' valuable reputation and intellectual property rights to lure consumers into ordering their Infringing Products on the false premise that they have been tested or recommended by Ms. Winfrey and/or Dr. Oz when they have not. Defendants are fabricating quotes or falsely purporting to speak in Dr. Oz and/or Ms. Winfrey's voice about specific brands or products that neither of them has endorsed. Defendants conduct has gravely injured Plaintiffs' reputations.As a MLM lawyer in the network marketing industry, it always interests me when a network marketing company get sued. Usually, the alarm bells go off when a company gets sued for operating a fraudulent pyramid scheme, usually as a class action lawsuit or a regulatory action. It's sort of like driving by the scene of a car accident...you can't help but stare. In this case, those allegations are never made. But there's still a lesson to be learned from this lawsuit. Network marketing companies will always be held accountable for the actions of their sales force, regardless if the company condones the behavior or not. In my opinion, monavie will be fine with this lawsuit. If monavie can demonstrate a history of cracking down of false and misleading statements about Oprah's "endorsement" of monavie (which I'm sure they can), the plaintiffs will have no case. But if the history of enforcement is lacking and monavie allowed itself to benefit from the misstatements, it'll be a different and very expensive scenario.I've personally worked with Monavie's compliance department and I know first hand they're one of the best compliance departments in the industry. With monavie, distributors are required to get all training materials approved by the compliance department before they can use them in the field. If distributors in monavie were using tools that implied Oprah's endorsement, I'm guessing the tools were unauthorized.Amway dealt with stronger allegations in both the UK and in the United States with the Pokorny class action lawsuit. Those actions alleged that Amway distributors were purposely misrepresenting the Amway opportunity and luring prospects into other fraudulent schemes. In the UK case, Amway tried arguing that it cannot be held liable for practices employed by its independent sales force. The judge took exception to the argument and made the following statement in the Order:I do not agree.. . . Amway cannot reap the benefit of such misstatements or misrepresentation without accepting the proper consequences flowing from the means by which that benefit was obtained. It permitted itself to be surrounded with a penumbra of impropriety, and took the advantages to its business thereby gained.”Since Amway benefited from the misrepresentations made by distributors, the judge said they cannot shift blame.There's a lot to be learned from this lawsuit. I know companies that wish they could throw their hands up and blame their sales force, but since it's a common enterprise between the company and the sales force, they're all accountable to each other. If you're an executive at a network marketing company, it's time to tighten those screws on your rusty compliance department. If the department has holes in it, a few bad apples could cost the company a fortune.Harpo Productions Lawsuit -- Oprah & Dr. Oz Suing More Than 50 Corporations

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