The FTC’s Prosecution Policy is Unfair and Deceptive to Multi Level Marketing Companies

Robert Fitzpatrick is a well known anti-mlmer.  Here’s his stance:

The recent action by the FTC to prosecute a leading multi-level marketing company, called “Vemma”, has aroused alarm among some Wall Street investors of similar MLM companies, especially Herbalife (NYSE:HLF), Nu Skin (NYSE:NUS) and Usana (NYSE:USNA). At least twelve publicly-traded MLMs are directly affected that represent a nearly $20 billion market capitalization. Those 12 companies alone generate $4 billion in revenue from the USA gained directly from 1.8 million households, variously called affiliates, IBOs, coaches, etc., all operating under legally binding MLM terms of “independent contractor” status.

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Summary Of Article

  • A proper defense of multi-level companies, Herbalife, Nu Skin and Usana, should challenge the FTC’s current prosecution of the MLM, Vemma, based on contradictory and irresponsible law enforcement.
  • Regarding MLM, the FTC has gone rogue, choosing arbitrarily and capriciously which companies to prosecute as pyramids or which to allow to operate with impunity. This is not consumer protection.
  • For 35 years, the FTC has asserted MLM is “legitimate”, yet now prosecutes one single company for practices that are endemic to the business model. This is “unfair and deceptive”.
  • MLM legality hangs on a thread of the “Amway Rules” yet the FTC has never inquired whether the rules are widely enforced or are preventing harm or deception.
  • The defining traits of MLM produce the market consequences the FTC is prosecuting Vemma for. This is bogus. Meanwhile Vemma’s top guns are busily setting up clone recruiting shops.

Again, this is Robert Fitzpatrick’s view.


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