Direct Sales and MLM

The Way Out Is In

By
Clay Brewer

The nature of this industry is complex. When I entered this field, I knew very little about the people who operated within it, the laws and regulations that encompassed it, or frankly what exactly it meant to fall under the descriptive phrase of “direct sales,” network marketing,” “multi-level marketing,” etc. Those on the outside may call it “Amway law,” or have a slight recollection of hearing the names Mary Kay or Herbalife. Some even reduce their understanding to a documentary or two that brought to life a Madoff-esque depiction. On the outside it’s easy to label things that are not entirely understood as black and white, good and evil, consumer protection versus consumer harm. Some bash it because they failed, many other bash the idea of it based on their particular world view. Of course, there are negative aspects like all other industries, but the general dismay in my opinion is misplaced now having experienced both sides. On the inside, we learn that the complexity is much different and is more like an evolving gray where multiple unknowns are present in the midst of the flimsy infrastructure of government guidance that operates under the façade of protecting consumers from both the evils of greed and even themselves. In practical terms, we all understand the truth that such flimsy guidance provides: the stifling of innovation and entrepreneurial risk-taking. The latter of which has presented the development of its own massive ecosystem inside the transformational gig economy. It is an incredible experience to work within such a niche area of the law as I’m exposed to phenomenal people who are doing nothing more than seeking to awaken their entrepreneurial spirit that the American dream offers, a dream that professes that its markets are welcome to all who are willing to work hard and take risks. The future of this industry will revolve around innovation, new ways to conduct the network marketing business model, new ways to connect. The days of garages full of inventory and personal deliveries are over, but the future of the gig economy is only at its genesis. The days of individuals working for themselves, setting their own hours, and using the power of global connectivity is here to stay. We have barely been exposed to the surface-level potential of what is to come and minds are already exploding. This industry can be a platform for change. Traditional institutions continue to escape with impunity, while the little guy attempting to embrace the American dream is thwarted from risk taking under the guise of “it’s for your own good.” The easy answer is to assess the current environment and declare that the industry is approaching collapse. I, myself, take a different view and I’m not some old timer who is attempting to maintain power on the old world. Yes, I’m young. And that has its advantages in an industry that’s starving for new ideas and interpretations. Take for example the recent FTC Notice of Penalty Offenses Concerning Money Making Opportunities. This “guidance” placing numerous companies on “notice” of previous FTC administrative rulings contains cases as early as 1941 and as recent as . . . 1980. Using such antiquated decisions to apply to a gig economy of remote work within the internet age is almost as ludicrous, if not more, than comparing a 1940s citrus grove analysis to cryptocurrency and blockchain protocols in determining what is and is not a security. The purpose remains clear and obvious: people cannot be given the power to control their own lives because, frankly, they’ll probably fail. So what does all of this mean for the industry as a whole? In my opinion, if things stay the same, we’re driving towards a cliff. But before we reach the cliff, we can aggressively change course and see what happens. Can we find a way to automate compliance? Can we create fair and transparent compensation plans? Can we figure out how to “ban” the bad apples to prevent the same distributors from ruining multiple companies? Can we figure out how to leverage the power of the metaverse? I’ve been told that this industry has led to great innovations in the past. If there’s juice left, it’s imperative that it happens again. This is why I adopted the great Zen Master Thich Nhat Han’s statement for the title of this article, “The Way Out Is In.” There is not going to be any lifeline from the outside or any genuine guidance for how to proceed from a regulatory perspective. Zilch. Those within the industry have the answers: listen to each other, work with each other, compete with each other. Some new ideas will work, some will fail. That’s the nature of the business. At Thompson Burton, we remain optimistic in the entrepreneurial spirit of this industry and are here to help decipher the ever-evolving gray. As the industry continues to evolve, I will seek to keep my ear to the ground and both eyes open to write further about what I see occurring and what I anticipate to come in the future. Predicting is a fool’s game but trends and possibilities are for the risk takers who adapt and adjust to the changing landscape. Our firm is fully on board for the latter, so let’s get started.

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