Direct Sales and MLM

Thoughts A Brewin' Newsletter 2

By
Clay Brewer

This week I’ve been diving into a bit more of the underlying issues that oftentimes may not receive the headline notoriety like an FTC v. Neora case, but have their importance nonetheless.

While I often question a regulatory agency’s motives or methods by which they approach matters, it’s undeniable that the premise behind certain actions make sense. For example, it should not be remotely controversial that being open and honest about your opportunity or products is a good thing. If you have to mislead to get someone to join or you have to deceive to make a quick sale, then the fault lies with you as a distributor or as a company, not with the regulatory agency. The issue lies with assumptions, as we all know what assuming makes us. And the FTC and SEC in particular have been proven to be just that their fair share of times. So what are a few of these undeniable ideas?

The first originates from the idea of free trials and cancellation policies. I’ll repeat myself here because it doesn’t seem to always land, if misleading tactics are needed to maintain a customer, then there’s a deeper problem that needs to be addressed. If a free trial is a way to discretely lock someone into an autoship or auto-subscription, then this needs to be addressed. It’s common practice to have a free trial that then turns into a renewal at a cost, but this should be openly stated.

The same idea goes for cancellations. Cancellations should be available via the same simple process as one used to initially sign up or a via a click and cancel option.

As for the continued use of the Penalty Offense Authority, the FTC recently brought suit against Lurn, Inc. and its executives alleging that the company made deceptive income claims and testimonials as a means to sell their business coaching products. While the matter is still ongoing, the complaint provides valuable insight into how the FTC frames their arguments and the types of actions they target in this regard.

In Case You Missed It


Attorney Brent Kugler of Scheef & Stone provided his thoughts on the FTC v. Neora decision.

You’ve probably heard many opinions of FTC v. Neora from attorneys, but Branko Jovanovic and Monica Zhong give an economist’s perspective.

While FTC v. Neora was a huge win for the network marketing industry, there are certain things that everyone should still be aware of going forward.

Thompson Burton’s very own Ally Hicks discussed how individuals and entities are able to utilize Tennessee trusts in estate planning.


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.

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.

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

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