Prior to 1979, network marketing was operating like the Wild West, with little legislation and lots of opportunists taking advantage of everyday people.
In 1979 the business model was legitimized by a landmark case involving Amway and the FTC. This paved the way for companies to do business with integrity and transparency, following the specific guidelines of both the FTC and the FDA (in the case of nutritional products).
After 1979, companies that sold quality products, did not make health or income claims, and offered fair income opportunities for distributors continued to spring up and take root. Meanwhile, companies that failed to adhere to these simple guidelines were fined or shut down. Although this tainted the perception of the business sector as a whole, it also deterred unsavory business practices and kept distributors safe.
I was once part of a company that was closed down by the FTC. The product was good and it worked. The compensation plan was fair. What was out of control were the distributors who were making health claims on open calls and in meetings. The word “cure” was used liberally. One day an FDA auditor was listening silently as a well-meaning woman shared how the product had “cured her arthritis.” Soon after this, the company was closed, unable to pay the fine.
I learned a valuable lesson, having to tell my teams in Canada, the U.S., and the Philippines that we were done. I was heartbroken because of all of the work we had put in to build the business. I honestly didn’t think I would ever be involved in network marketing again.
After some research and careful consideration, I understood what made a company compliant and how both the company and the distributors were responsible for adhering to FTC and FDA guidelines. When I joined my current company, in 2003, I focused on training our associates to share their stories in a compliant way, whether on a call, at an in-home presentation, or through social media.
Furthermore, I teach our leaders in North America to ask at all meetings if there is anyone from a government agency present in an auditing capacity. If so, we invite them to come and sit at the front of the room. We are proud of our compliant message and emphasize that any incomes mentioned are not typical and the result of expended efforts.
Together with my husband, Chris, I want to be able to liberate many more families and partner with people for the long haul. After experiencing a company closure, we deeply appreciate compliance and work hard to protect our team.
As network marketing professionals, let us all link arms and teach compliance. Study the governing regulations of the FTC and the FDA, and the suggested practices of the DSA. Teaching our teams to share the power of our profession passionately and compliantly is the only way to create a safe and sustainable business environment.
Susan Sly is a top income earner and passionate advocate of
network marketing. An author, speaker, and trainer, she has appeared on Lifetime Television and ABC Family. She and her husband Chris are parents to four children.