Direct Sales and MLM

Thoughts A Brewin' Newsletter 1

By
Clay Brewer

Welcome to the first iteration of the Thoughts a Brewin’ newsletter where I share what I have read over the past week and general thoughts about things I find interesting whether in the world of network marketing or elsewhere.  

The most consequential news for the network marketing industry came from a federal district court in Dallas, TX, on September 28, where the Court rejected every one of the FTC’s claims against Neora in FTC v. Neora. I wrote about this decision here, and provided insight into what companies should do going forward.

FTC’s Notice of Penalty Offenses

The Penalty Offense Authority is back with the Federal Trade Commission (FTC) having now issued five notices in total. This time they target the use of confidential data by issuing the Notice of Penalty Offenses Concerning Misuse of Information Collected in Confidential Contexts. In short, be open and honest about what you are using data for and receive express consent from the individuals prior to using such information. It's really a low bar, but you'd be surprised at how many companies fail to disclose this information, or, even worse, companies that do not know what they collect themselves. Here is a sample cover letter of the Notice.

Following the FTC’s unanimous loss of their 13(b) power at the Supreme Court in April 2021, the FTC sought new powers from an old statutory scheme, 5(m)(1)(b), better known as the Penalty Offense Authority (POA). These civil penalties are possible if the FTC can prove that the recipient of the Notice knew that their conduct was unfair or deceptive in violation of the FTC Act AND the FTC has previously issued an administrative decision that said conduct was unfair or deceptive. I'll dive into these specifics in a later edition, but the, for now, here are

the previous four Notice of Penalty Offenses Concerning: (1) Education; (2) Endorsements; (3) Substantiation; and (4) Money-Making Opportunities.

In Case You Missed It

Kevin Thompson sat down with Tom Chenault to discuss the big, and, at times, controversial topics of the day.

Network marketing needs more courage in its ranks. There’s both a moral and a legal argument for such a shift.

There’s always the desire to sue a company or sue a distributor, but what actually goes into that ad should you do it? Kevin Thompson, JK Simms and Morgan Hartgrove dove into what they’ve been experiencing and how everyone should go about this nuanced topic.

The devil is in the details and it’s best to admit what you don’t know and to research to make an informed decision because regulators, such as the SEC and FTC, rarely provide the benefit of the doubt, look no further than the recent DEBT Box and iX Global litigation. Kevin Thompson, Troy Dooly, and I discuss our initial thoughts when this complaint came down from the SEC. This case is evolving with a lot happening since this last discussion. I'll dive into this deeper when further information comes to light.

No matter how long the network marketing industry survives, the key issues never change. Kevin Thompson, Troy Dooly, and I discuss these hot topics.

The most recent case in network marketing, FTC v. Noland, provides a key glimpse into the minds of the FTC and how courts are starting to interpret such arguments. Kevin Thompson and I dive into what this could mean going forward. Note that a lot of the items we discussed were avanues that Neora was able to capitalize on to beat the FTC last month. I wrote about what companies needed to learn from FTC v. Noland in order to be successful like Neora.

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