Posted by Peter Arnold / Canada on June 29, 2003 at 20:27:40:
Dear PN Partners:
With your permission, I'd like to express some of my own thoughts with you regarding the new "realities" we face in the MLM industry -- and in our "sector" of the industry.
As professional Network Marketing entrepreneurs, trying to honestly promote and share our products / services / business opportunities / marketing systems / leads / with other interested parties, I believe we had better be well INFORMED, and prepared, for the new regulations + the resulting challenges that lie ahead.
Because make no mistake - the landscape is no longer the same. And this is especially true for those of us engaged mostly in i-Network Marketing (building MLM online -- Inter-Network Marketing).
Rather than go into great witten detail here - I have given only a short commentary, and placed below, a number of links that contain most of the information we need to know -- but unless Forum/Board viewers receive this as an e-mail - you'll need to copy them down and then enter them separately into your computer browser to visit the sites. Or, copy and paste this page into an e-mail - and send to yourself - you'll be able to instantly click on each link.
There's a lot of information in these sites - and it will take some time to study them - but frankly, I don't see that we have a choice any longer.
Because the HEALTH / NUTRITIONAL sector of our industry has been a prominent target recently -- and because a number of industry experts have been holding Conference Calls and Web Conference Meetings (Len Clements, MLM attorneys Kevin Grimes, etc) about this -- I've included some information on -- FTC + FDA + DSHEA -- places we should ALL become more familiar with in my opinion.
There's a growing alarm among the regulators about -PRODUCT CLAIMS and INCOME CLAIMS by MLM distributors -and about the escalating cases of - FRAUD - TAX EVASION - Internet PYRAMID SCHEMES, etc.
There's also a renewed push for more CONSUMER RIGHTS (a vote getter) against rapidly increasing "harassment" from both - TELEPHONE Calls -and E-MAIL Spam.
Much of this legislation will be a welcome relief for us - but only IF it's brought in clearly, and fairly. The point is -- WE in this industry embrace many of these areas - and if we are not careful, and well informed, we can get caught squarely in the middle - not only with stiff fines - but even imprisonment!
Yet, I believe the solution is quite simple -- more KNOWLEGE -- more EDUCATION.
Let's break this down into five (5) Parts...
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(1) ==> FTC (Federal Trade Commission) - GENERAL Information
FTC = Consumer protection laws (fraud / misleading advertising / antitrust, etc). The FTC has recently attacked and/or shut down MLMs and Distributors in -Seasilver (and its major distributor) - Coral Calcium Supreme - Heart Bar - Trek Alliance - The Tax People -Neways - Cash Evolution - Amway (for price fixing) - and others.
http://www.FTC.gov/
http://www.FTC.gov/ftc/sitemap.htm
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(2) ==> FTC & S-P-A-M
ISP's (Internet Service Providers) have been using Filter Devices (like Spam Cop, Spam Assassin)to "block" SPAM -- a huge (and costly, for many)annoyance. It's estimated that about 60% of all e-mail is now Spam. Many ISP's (like AOL) automatically assume that ANY Bulk E-Mailing (autoresponders) is Spam -- and therefore, those e-mails get "blocked" (not delivered to the intended person). This has hurt "honest" MLM Internet Marketers (like us) - and we have had to struggle to find legitimate ways 'around' these new laws.
www.SpamLaws.com
http://www.wa.gov/ago/junkemail/
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(3) ==> FTC & 'DO NOT CALL'
People are signing up at lightning speed to "register" for the new Federal laws - to take effect in October(many State laws are now in operation). Heavy FINES are in store for those who violate these laws (up to $12,000). Already, two MLMrs have been hit by fines that I know of - one for $1,000 - one for $2,700. They had purchased leads from a so-called reputable Lead Co (name, pho no. e-mail add, etc) - called them - but because some had 'registered' with the FTC for this protection - they brought charges against them. When these MLMrs went to the Lead Co for some recourse, they were told that they had purchased 'opt in' leads - that there were the appropriate 'IP verifications' - the correct 'date stamps' - on and on - and that this FTC issue was the "MLMrs" problem.
So we have to be 'very careful' from now on - and demand PROOF (in 'our' hands) from Lead Companies that we're PROTECTED. Anyone 'selling' leads had better make sure that those leads are truly "waiting to hear from us" -- that they're "opt-in" -- permissive marketing compliant leads
Here are the two EXCEPTIONS to these new rules...
a)- If they were a customer (or had a business relationship with us), we may contact them - for up to 18 months after the last business transaction.
b)- If they requested information (as the website says, submitted an inquiry) we can contact them - for up to 3 months.
http://www.FTC.gov/donotcall
http://www.FTC.gov/bcp/conline/edcams/donotcall/media/2003/06/factsheet.pdf
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(4) ==> FDA (US Food & Drug Administration) - GEBERAL Information
FDA = Responsible for approving food and drugs for widespread use. In 1943, a court case stated that the FDA's purpose should be - "to protect the public, the vast multitude, which includes the ignorant - the unthinking - and the credulous who, when making a purchase - do not stop to analyze." (see DSHEA below!)
http://www.FDA.gov/
http://www.FDA.gov/sitemap.html -
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(5) ==> DSHEA (Dietary Supplement & Health Education Act)
DSHEA (thanks to Senator Orrin Hatch I believe)states... "consumers should be empowered to make choices about preventive health care programs, based on data from scientific studies of health benefits related to particular dietary supplements." (see FDA above!) This law was passed by Congress in 1994, after one of the biggest outcries (letter writing campaigns)by outraged consumers in the history of the USA.
It seems there has always been a fierce battle between the FDA and DSHEA. And now it looks like the FDA and the FTC have "joined hands" in their relentless fight against violators of their regulations. These two government agencies are extremely powerful. Add to that, the lobbying power and deep pockets of the AMA and the Pharmaceutical Industry -- and we have a force to reckon with. In spite of this, more and more consumers are searching for "alternative" ways to take control of their OWN health -- safe and natural ways -- without the toxic side effects and heavy expense of over-prescribed drugs (said to be the 4th leading cause of death in North America).
Ignorance of the laws is no defense. Of course, in the case of FTC / FDA, they don't completely follow the law - they make some of their own rules. That is, DSHEA set out specifics in about classifying nutritional supplements as FOOD -- not as DRUGS -- and they were therefore subject to less strict guidelines. The FDA immediately "disagreed" with some points and set out their "own" rules. Fortunately, those rules have to have public comment - and they had to soften the rules because of strong opposition.
It appears now that they are using a new tactic. DSHEA limited what FDA can do with regard to dietary supplements as "foods". It said nothing about FTC. So, FDA and FTC have combined their efforts. FTC had never previously written any rules about advertising dietary supplements. Now they have, and they are more restrictive than the intent of DSHEA (the law).
So, it seems we can actually abide by "the law" - and still get in trouble with FDA and FTC - if "they" don't agree with the law. What many companies (including MLMs) may have to do is change their way of marketing product -- and that can be a good thing. Many of the "sensationally hyped" websites will disappear. More people will probably rely on their "company" website - which is generally more in line with compliance than "individual" websites.
It seems that, as long as Health/Nutritional marketers speak in STRUCTURE / FUNCTION language - and not in DISEASE language, it will be okay. The RED ALERT is - that despite compelling stories to the contrary - nutritional products "cannot" be claimed to - diagnose - prevent - treat - cure - or mitigate diseases. It's all about adequate DISCLAIMERS and full disclosure.
AMERICAN NUTRACEUTICAL ASSOCIATION - The ANA + DSHEA have put together an excellent Home STUDY COURSE (I have taken it) - that I believe everyone associated in the Health/Wellness sector of the industry should take (I feel it should be made mandatory by MLM Head Offices for distributors). I believe it will help protect us, our businesses and our companies. We learn the 'right' way to present products / third party educational materials - we become certified the ANA - we gain increased knowlege - credibility and professionalism. Here's the site...
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Home Study Course - http://www.ana-jana.org/dshea.cfm?cfid=26857&cftoken=29956752
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More DSHEA information...
http://vm.cfsan.fda.gov/~dms/dietsupp.html
http://vm.cfsan.fda.gov/~dms/supplmnt.html
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In summary, we are in a brand new era of strict Government Regulation - where there's "muscle" to enforce it. We as business entrepreneurs (and consumers) need to know our way around these. Yes, the challenges are out there -- and they always will be -- but in the end - human ingenuity - driven by high ethics and determination, will win out -- because we will be committed to on-going education, professionalism and marketing excellence in building successful businesses together.
I hope this information will be useful.
Sincerely, Peter A.
Peter R. Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada
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