Every network marketer needs to know this truth: compliance with federal guidelines and regulations is a must if you want to stay in business. It is essential that all distributors know the rules and abide by them. It is equally essential that companies take compliance with the FTC and FDA regulations seriously, as it is their responsibility to protect both themselves and their distributors, whose livelihoods depend on the company’s longevity. Company executives need to partner with the field to safeguard the future of both and ensure that everyone has a level playing field on which to conduct business.
Most initial infractions are unintentional, and turn out to be the result of a distributor’s lack of awareness or understanding of a company’s policies. To prevent these kinds of infractions, a company’s compliance officer is a lot more effective if his role is more friendly neighborhood cop than dogged detective or relentless district attorney with prosecution on his mind.
As I work with our compliance consultant, our customer service supervisor, and our international staff, our objective is to ensure that we maintain consistent record-keeping and generate appropriate responses to distributors whose behavior may be in violation of our policies and procedures and/or FTC or FDA regulations.
Whenever an inquiry comes in regarding a possible infraction by someone in the field, our consultant immediately researches the situation. Our company is also notified about potential compliance infractions by Internet search tools that alert us whenever our company name or product names are posted online. These notification methods allow our consultant to quickly research any potential infractions and, if indicated, to recommend corrective action.
In the cases where correction is indicated, we send the distributor a written first warning, expressed in the spirit of that “friendly neighborhood cop” and noting that the infraction needs to be rectified immediately. Usually this is all it takes, and the issue is resolved.
However, if repeated infraction alerts from the same distributor start coming in, we proceed with a second warning and even a possible suspension.
Compliance comes down to two simple actions:
Ensure that all distributors understand the company’s policies relating to compliance.
Help everyone adhere to the letter of the law as set down by agencies of the federal government.
As a company, we work hard each day to make compliance with FTC and FDA regulations a key part of our business through training and communication. Our goal is always to reach 100 percent compliance with all regulations for the good of our distributors, our company, and the future of network marketing.
Don Karn is vice president of North American markets for an international network marketing company. He is also a board member of Gabriel Media Group, Inc., publishers of Networking Times.