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Direct Sellers Update: Regulation, Law & Policy

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17 results

June 1, 2023

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6 min read

The Success By Health (FTC v. Noland) Decision and Its Impact on the Direct Sales Industry

A federal judge in Arizona recently rendered a 131-page order setting forth his findings of fact and conclusions of law following an 11-day bench trial,
explaining why he believed that the Federal Trade Commission (FTC) had proven that defendants Success By Health (SBH) and various related entities and
individuals had engaged in a pyramid scheme, made false income claims, and committed various other violations of the FTC Act. SBH’s conduct ...Read more
...Read more

March 10, 2023

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2 min read

Direct Sellers Should Use the FTC’s Recent Distributor Enforcement Actions to Remind Distributors of the Consequences of Deceptive Claims

The lawsuits, filed by the Department of Justice, on behalf of the Federal Trade Commission, alleged that the distributors, who styled themselves as “wellness
advocates” and touted their expertise as medical practitioners, made numerous claims during webinars conducted in 2022 that doTERRA’s products could
prevent, treat, or cure COVID-19.
...Read more

February 9, 2023

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6 min read

No More Non-Competes?

Direct sellers should take note of recent Federal Trade Commission enforcement actions and a proposed FTC rule which could fundamentally change the legal
landscape for non-compete clauses. Under the FTC’s new approach, companies would not be permitted to enforce non-compete clauses against their
workers. And yes, that includes independent contractors.
...Read more

March 24, 2022

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3 min read

Are Your Agreements Enforceable?: Ensuring An Adequate Registration Process

Most direct sales companies have arbitration agreements and class action waivers in their distributor and consumer agreements these days.  Those
provisions go a long way in making sure your company is protected from bet-the-business, expensive, and time-consuming class actions and other litigation. 
But a recent decision out of California, Sellers et al. v. JustAnswer, LLC, 289 Cal. App. 5th 444 (2021), underscores the importance of ensuring yo...Read more
...Read more

March 21, 2022

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2 min read

The FTC Remains Focused on Misleading COVID-19 Claims

In 2020, the Federal Trade Commission (“FTC”) sent letters to a number of direct sellers, alleging that they or members of their sales force had made false or
misleading health and earnings claims related to COVID-19. Then in 2021, Congress enacted the COVID-19 Consumer Protection Act (the “Act”), providing for
civil penalties of up to $46,517 for every misleading claim about the treatment, cure, prevention, or mitigation of COVID-19. And just recently, m...Read more
...Read more

October 4, 2021

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1 min read

Protecting Your Business: Five Things You Should Do Now

June 22, 2021

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3 min read

Don’t Let Your Guard Down: The Limited Impact of the AMG Capital Decision

The AMG Capital decision was certainly a win for the direct sales channel, removing the primary tool the FTC has used over the past several decades to win
money on behalf of consumers in court, § 13(b) of the FTC Act.
...Read more

June 22, 2021

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7 min read

The FTC’s Radar, and How to Stay Under It

2020 and 2021 have brought an unprecedented amount of FTC scrutiny to the direct selling channel. With some companies under formal investigation and
many others receiving warning letters, it is no surprise that industry leaders want to better understand what the FTC is looking for and ways to prevent
becoming an FTC target. 
...Read more

June 22, 2021

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2 min read

The Future of the MLM Exemption From the Business Opportunity Rule Is at Risk

The Business Opportunity Rule is up for its scheduled 10-year review, and the results could have a dramatic impact on the direct sales channel....Read more

June 17, 2020

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6 min read

The FTC’s Heightened Scrutiny of Direct Sellers Continues During the COVID-19 Pandemic

COVID-19 continues to impact much about our daily lives – from the way business is conducted to how we communicate with friends and family. As a result of
COVID-19, companies must adapt to and remain mindful of the shifting environment in which they conduct business. Indeed, the COVID-19 pandemic has
created a complicated and risky compliance environment for companies. That is certainly true for direct selling companies, who remain on the r...Read more
...Read more

February 6, 2020

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2 min read

FTC Obtains Asset Freeze of Success By Health Top Executives in Arizona Federal Court

On January 17, 2020, a federal judge in Arizona granted the Federal Trade Commission’s (FTC) request to both temporarily shut down the multi-level
marketing company Success By Health, as well as taking the more extreme step to freeze the assets of top executives. Success By Health is best known for
its mushroom-infused instant coffee product “MycoCafe.”
...Read more

January 29, 2020

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3 min read

Federal Court Dismisses Multiple Claims in Ongoing Class Action Against LifeVantage

Last month, the District Court of Utah dismissed all but one claim filed against LifeVantage Corporation in a pending class action lawsuit. LifeVantage is a
direct-sales company that distributes dietary supplements, including Protandim—a supplement consisting of a blend of five herbal ingredients.
...Read more

December 3, 2019

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4 min read

The Direct Selling Self-Regulatory Council: What Your Business Should Know

Self-regulatory policing by an independent body is a longstanding tradition in many industries that has now made it to the direct selling world. But, since its
inception, we’ve fielded many questions from our direct selling clients about what the Direct Selling Self-Regulatory Council (DSSRC) is and what its impact will
be.
...Read more

November 20, 2019

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6 min read

New Executive Orders May Impact FTC Enforcement Actions Against Direct Sellers

Two executive orders issued last month may decrease the FTC’s ability to regulate industries through informal guidance documents. Because the FTC’s
regulation of the direct selling industry relies heavily on guidance, the orders are particularly relevant to our multi-level-marketing (MLM) and direct selling
clients. Although any assessment of the practical impact of these orders is speculative at this point, we believe they may affect the FTC’s regulati...Read more
...Read more

October 10, 2019

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2 min read

Successfully Fighting Plaintiffs’ RICO Claims Alleging an Illegal Pyramid Scheme

A recent Memorandum Opinion and Order from the Northern District of Texas in Ranieri v. AdvoCare illustrates the challenges plaintiffs may face in alleging a
RICO claim against a direct selling or multi-level marketing (MLM) company. In that Order, the Court dismissed the plaintiffs’ RICO claim against AdvoCare for
failure to state a claim based on the argument in AdvoCare’s motion to dismiss—filed by Winston attorneys on behalf of AdvoCare—that the plai...Read more
...Read more

October 4, 2019

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10 min read

FTC v. AdvoCare: Enforcement Action Demonstrates Importance of Compliance Programs

On October 2, 2019, the FTC announced a settlement with AdvoCare International, L.P., in which AdvoCare, without admitting or denying the allegations in the
order, agreed to abandon its multi-level compensation plan.[1] Under the order, AdvoCare must pay the FTC $150,000,000, which will be deposited into a
fund for equitable relief.
...Read more

October 3, 2019

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less than 1 min read

Welcome to the Direct Sellers Update: Regulation, Law & Policy Blog

We are pleased to announce the launch of our blog covering regulatory, legal, and policy issues affecting direct sellers. Our goal is to bring important legal,
regulatory, and policy developments and updates straight to you. 
...Read more

About This Blog

Winston & Strawn’s Direct Sellers Update: Regulation, Law & Policy blog provides developments and insights on the legal issues affecting direct sellers and multi-level marketing organizations.

Contributors

John Sanders

Partner

Katrina Eash

Partner

Rex Mann

Partner

Related Capabilities

  • Litigation/Trials
  • Class Actions & Group Litigation

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