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You are here: Home / Ask Victoria / Ask Victoria: Should Party Plans Worry About Recent FTC Actions?

Ask Victoria: Should Party Plans Worry About Recent FTC Actions?

December 26, 2016 By admin Leave a Comment

victoria-dohr-P24Most of the sales of products by party plan companies are made to people who are not consultants.

In 2015 and 2016, the Federal Trade Commission (FTC) filed orders against Vemma and Herbalife, each of which is a network marketing company.  One of their concerns was a lack of customers who were not themselves representatives.  Another concern was misleading income claims.

What You Need To Know

If a high percentage of your company’s sales are made to consumers who are not consultants, you don’t need to worry about having a lack of customers, because you will have a lot of them!

However, if you or your consultants are making improper income and lifestyle representations, your company could get into trouble.

In October 2016, FTC Chairwoman Edith Ramirez said, “A legitimate multi‐level marketer must accurately represent its business opportunity and what a participant is likely to earn.  These representations must be truthful, non‐misleading, and substantiated.  Practically speaking, this means that multi‐level marketers should stop presenting business opportunities as a way for individuals to quit their jobs, earn thousands of dollars a month, make career level income, or get rich because, in reality, very few participants are likely to do that.”

She added, “Now, it’s time that MLM income representatives matched the income reality of the majority of multi‐level marketing participants.  This means both explicit statements about how much a participant is likely to earn as well as implied claims and lifestyle claims.  We all know examples of the obvious types of lifestyle claims that can be misleading, representations about participants that they can be set for life or make more money than they ever thought possible and images of expensive houses, luxury cars, and exotic vacations.”

To read all of Ramirez’s income claim concerns, see pages 6 and 7  of the full transcript of her remarks at the DSA Business and Policy Conference.

About Your Company

The FTC has the power to pursue individual companies through courts, but the FTC does not make laws that apply to every direct selling company.

However, their concerns are real and should not be ignored.  If you share or permit your representatives to share improper earnings representations, you will be putting your business at risk of FTC scrutiny, even if yours is a party plan company.

 

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Filed Under: Ask Victoria Tagged With: real customers, real sales

About Jay Leisner

P15Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving party plan and network marketing companies across the globe.

Direct Selling Startup GuideJay Leisner and Victoria Dohr authored the top-rated book for new and young network marketing and party plan companies, "Start Here: The Guide to Building and Growing Your Direct Selling Company".

Available in English and Spanish. This startup guide contains 250 pages of wisdom that will guide you through the right steps to start and continue on your journey to build a successful direct selling company.

You will save thousands of dollars and hundreds of hours of your time using the information you will read in our book.

Direct Selling Edge ConferenceSylvina Consulting and ThompsonBurton sponsor the two-day pure education "Direct Selling Edge Conference" for new and young direct selling companies in different cities. The wisest direct selling executives never stop being students. They seek out opportunities to learn more. They understand that the long-term success of their companies depends on how much they know, so they make efforts to keep learning.

In 1986, Jay began his career in direct selling by working for a major direct selling software provider. First as a software developer and later as a project leader and a business analyst, Jay worked closely with new and established network marketing and party direct selling companies to provide them with software solutions to meet their unique requirements.

Jay contributed in many ways to the success of large implementation projects for many companies. Jay also worked with dozens of smaller companies to assist each of them in various capacities to provide them with the systems they needed to help their businesses to grow faster.

Along the way while working with them, he learned the secrets of successful direct selling companies and the challenges faced by them. In true entrepreneurial spirit, Jay’s decision in 1999 to start Sylvina Consulting as a direct selling consulting company was driven by what he saw was a need for answers, advice, and solutions.

In 2004, 2006, 2009, 2014, and 2018, Jay gave presentations on compensation plans, recognition, and field leadership development at conferences held by the US Direct Selling Association.

He traveled to South Africa in 2015, 2016, and 2017 to conduct workshops on compensation plan design and recognition programs for member companies of the South African Direct Selling Association.

In 2017, Jay spoke at the Canadian Direct Sellers Association Meeting on the importance of recognition.

More than just a compensation plan expert, Jay is exceptionally skilled at advising new and established companies on business strategies. Before offering advice or solutions, he asks important questions to understand each client’s specific concerns and goals.

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