Direct Sales and MLM

Trainer or Touter? The Deception That Can Be Training

By
Clay Brewer

Courage: Emotional strengths that involve the exercise of will to accomplish goals in the face of opposition, external or internal; examples include bravery, perseverance, and authenticity (honesty).

How to be a Stoic, Massimo Pigliucci

The presence of trainers and motivational speakers in the world of network marketing is nothing new. From the most experienced network marketer to the novice enrollee, everyone has been exposed to this world to some degree. This article is not a criticism of the individuals that train or motivate.  They’re a much-needed resource in this world and have lots to offer. But if current trends continue, this particular category could be used to cause more harm than good.  This will likely not be my most popular article, but for that reason I find it ever more prudent to write it now.

It’s one thing to speak in hypotheticals and toeing the gray line, but it’s quite another thing to have hard facts and a statute on the books that has been used time and time again for these exact purposes. One relevant statute I’m speaking about is Section 17(b) of the Securities Act of 1933. This provision prohibits,  

“publish[ing], giving[ing] publicity to, or circulat[ing] any notice, circular, advertisement . . . or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer . . . without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.”

So how does this apply and how has it been applied recently?

Look no further than recent popular settlements between the SEC and NBA Hall of Famer Paul Pierce, influencer Kim Kardashian, actress Lindsey Lohan, and many many more.


If 17(b) can be used for a few social media posts, then being on stage at an event and/or on a company’s website is undoubtedly relevant. For the SEC to have jurisdiction, a security must be involved, but as we have seen lately, they take a broad view of what’s considered to be a security.  At the very least, have respect for your name and do a little research before you pump up some random CEO and his new venture.  This is especially true if part of the pitch is “We’re based out of Dubai to avoid US law.”  Newsflash: If they’re paying a US trainer, they’re targeting US consumers.

I agree that it can be hard to discern whether a company is a viable network marketing company or a pyramid scheme.  But when it comes to companies that delve in the management of financial assets, there’s no excuse.

If a trainer is also on stage at an event stating they’re only there to train and have no commentary on the underlying business, there’s an issue here as well. A trainer should never be on anyone’s stage or knowingly on anyone’s website if they have not done due diligence on the underlying business and actors involved. Even more importantly for our purposes here, Section 17(b) does not have an intent requirement. This means it doesn’t matter what you knew or didn’t know. The often-cited head in the sand defense won’t save you here. If you tout yourself as an expert, then you personally take on that higher burden. And if a trainer is paid to train an audience on how to suck in more victims, the SEC will not have to stretch far to rope the trainer into a controversy.

Trainers have an obligation to protect the industry just as much as attorneys do, as distributors do, and as executives do. If a trainer or anyone portraying themselves as an expert in the industry falls for the most obvious scams, are they deserving of further trust?  It’s for the market to decide.  Yes, companies will forever be criticized for being a pyramid scheme.  When it comes to financial assets, it’s a completely different ballgame and the standards are higher.  The intelligence should be higher as well.

Let’s be honest here, if someone offers me $100k and travel expenses to speak on a stage in Dubai, it’s not for my legal acumen no matter how brilliant I think I am.  It’s for my name and what having that name will do when the average person is vetting the company. Statutes like Section 17(b) will quickly be triggered before you know what hit you. As Ryan Holiday would write, ego is the enemy here. We need more courage.

Oftentimes it can be a double-edged sword of deception as well with many companies and executives of those companies craving credibility. This craving can lead to mistakes by good actors thirsty for a payout.  It’s these companies and executives that are more than willing to pay a hefty premium on the usual rate to capture that credibility, if even for a moment. This should be the first red flag.  

To quote the great Warren Buffet, “It takes 20 years to build a reputation and five minutes to ruin it.”  If there’s doubt about a program, it might be best to decline the invitation and sit it out.  We need more from the professionals in our sector, otherwise the average participants don’t stand a chance.

It takes courage to speak the truth.  It also takes courage to say “no” when it would be easy to say “yes” to hundreds of thousands of dollars.  Whether it’s a friend of 30 years or a new acquaintance you met five minutes ago, courage is needed in the industry of network marketing more than ever. MLM and network marketing has become synonymous with pyramid schemes because we’ve let it. Innocent before proven guilty exists in the court of law but is and never will be a feature in the court of public opinion.

The presence on stage should be carefully considered.

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