FTC
Thank you to the SSN staff and contributors for telling the stories of 2021
I want to begin the final PubNote of 2021 by thanking my amazing team here at Social Selling News—Contributing editors Jennifer Mills and Jenna Lang Warford for their invaluable assistance with copyediting, creative content and communications, Art Director Ronald Winters for his brilliant work designing the print version of this journal each month, contributing writers Stephanie Ramirez and David Rauf for their insightful and well-written articles, and last, but not least, our Director of Advertising, Joyce Inman, whose professionalism and dedication makes this endeavor possible.
Stepping into the position of Publisher at the start of the year was an exciting, but daunting, moment. However, the hard work and positive attitude of each of these individuals that I am proud to call colleagues and friends made that transition remarkably smooth.
The full recording of the SSN Webinar: “The FTC Warning Letter: What Direct Sellers Should Know,” is now available to watch. Social Selling News (SSN) Publisher David Bland hosted this important discussion which featured industry experts John Villafranco of Kelley Drye & Warren LLP and Momentum Factor CEO Jonathan Gilliam.
With the Federal Trade Commission (FTC) recently putting more than 1,800 businesses, including many direct sales companies, on notice for misleading earnings claims, this is a major channel development. Bottom line … if you are in the direct sales industry, this is one webinar you need to watch.
Click here to watch the video recording.
And to learn more about the warning letters, check out our on-going coverage.
Join us November 18 at 1 pm Central as Social Selling News (SSN) Publisher David Bland with be hosting an SSN Webinar: “The FTC Warning Letter: What Direct Sellers Should Know.” Joining David to discuss this important topic will be industry experts John Villafranco of Kelley Drye & Warren LLP and Momentum Factor CEO Jonathan Gilliam. With the Federal Trade Commission (FTC) recently putting more than 1,800 businesses, including many direct sales companies, on notice for misleading earnings claims, this is a major industry development. Bottom line … if you are in the direct sales industry, this is one webinar not to miss.
Click here to register today – space is limited!
And to learn more about the warning letters, check out our on-going coverage.
FTC puts hundreds of companies on notice in span of two weeks
By: David Bland
On two separate occasions last month, the Federal Trade Commission (FTC) resurrected a rarely used weapon to put a total of 770 U.S. companies and entities, including an entire business sector, on notice for punitive monetary action should they be found to violate Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices.
On Oct. 5 the Commission announced that it was sending a Notice of Penalty Offenses to 70 of the largest for-profit colleges and vocational schools in the country to notify them that false promises about graduates’ future job and earnings prospects would be met with significant financial penalties. Eight days later, the FTC sent a second set of Notices to 700 companies, including several Fortune 500 corporations, across a multitude of industries and business channels. This notice was in regards to deceptive endorsement practices, including fake product reviews.
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A direct selling veteran talks about the importance of technology and leadership in building global companies
By: David Bland
Dallin Larsen, a former Ernst & Young National Entrepreneur of the Year and Utah CEO of the Year, founded Vasayo in 2016. Prior to Vasayo, Larsen founded MonaVie in 2005 and grew that company from zero to nearly a billion dollars in annual sales in less than five years. Under Larsen’s direction, Vasayo’s philanthropic partnership with Hearts & Hands for Humanity has generated enough contributions to build more than 130 wells in Tanzania, Africa, delivering clean water to hundreds of thousands of people.
Founded: 2016
Location: Pleasant Grove, Utah
Website: vasayo.com
SSN: Tell us about your history in direct selling.
My first experience with network marketing was with Nu Skin in 1988. I was in my late 20s and living in San Diego, California. I fell in love with the industry and what it could do for me and my family as well as others. About a year later, a gentleman called to tell me about a new company and asked that I meet with the founder. So, I interviewed with Myron Wentz, the founder of USANA. One thing led to another, and the next thing I knew I was heading up sales for that company. We launched USANA in 1991, and I was with them for roughly 10 years. That’s where I cut my teeth and gained a lot of valuable experience.
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Channel watchdog counsels companies, maintains dialogue with regulators
By: David Bland
For the cases that get to the level of a DSSRC referral, usually there’s an issue of systemic patterns of behavior that are going on—particularly with the claims; it is rarely a one-off post, and, with respect to earnings claims, in particular, it’s often the tip of the iceberg that leads the FTC to a much deeper rabbit hole.
— Peter Marinello, Vice President at BBB National Programs and Director of DSSRC
In 2019, the direct selling channel officially became a self-regulated business sector. Two years on, and the channel is reaping the benefits. Founded by the Direct Selling Association (DSA) and administered by BBB National Programs, the Direct Selling Self-Regulatory Council (DSSRC) is an independent, non-profit organization that is continuing its mission of oversight through monitoring, investigation, and enforcement of the regulations and ethics standards that have been set in place for direct sellers by the Federal Trade Commission (FTC) and the DSA.
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Commission approves changes to ‘democratize the process’ and encourage public participation
In addition to formal rulemaking, the new changes will also apply to requests by certain parties [including the direct selling channel] for special exemption from FTC rules, as well as petitions related to industry guidance issued by the Commission.
—Federal Trade Commission
Marking a continued effort to implement streamlining and overhauls to its rulemaking procedures authorized under Section 18 of the FTC Act, the Federal Trade Commission (FTC) held a virtual open meeting on Sept. 15, 2021. One of the items on the agenda was a vote to approve changes in the Rules of Practice and other rules affecting public access to the petition component of the FTC’s rulemaking process.
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Direct sellers should still be prepared for high, competitive threshold and tough regulatory landscape
By: Stephanie Ramirez
In this new era of social selling in the United States, there is a strong focus on customers, so you need a good product. The brand and products are as important as the opportunity.
—Ray Urdaneta, CEO and Co-Founder, MONAT Global
You have to decide beforehand what you’re open to changing and what you’re not open to changing, but that’s going to drive the whole modeling process and the whole testing process.
—Jacques Mizrahi, CEO, SwissJust USA
The United States is a reliable and consistent economy with a long-standing history of growth. According to the economics research firm, Focus Economics, it will most likely retain the title as the world’s largest economy, with a forecasted GDP of $25.3 trillion (USD) in 2024. In addition to the favorable economic climate, in comparison to many other countries, the U.S. is a wealthy nation with over 320 million people, many of whom like to shop.
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Your questions answered on the FTC’s new battle plan against direct sellers
By: David Bland
Is the direct selling channel under greater threat now from FTC action than it has been previously?
All signs point to yes. While the FTC has spent the past few decades consistently taking action against several direct selling companies accused of operating as pyramid schemes, the overall scope of this action has been limited. However, over the past year, the Commission has expressly stated that the direct selling channel is on the short list for renewed FTC scrutiny and enforcement. Furthermore, in a move catalyzed by the Supreme Court decision on 13(b) to strip the agency of its restitutive monetary relief powers, commissioners have begun the process to create new weapons for winning both equitable and punitive monetary relief in future proceedings.
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