“Coming together, we are set to unleash an unparalleled synergy, combining our unique strengths to foster growth and opportunities, not only across Korea but throughout Asia,” said Robert Stevanovski, ACN Chairman and Co-Founder. “Our journey with our respected counterparts has been rooted in mutual admiration and a deep, personal connection spanning more than two decades. This is more than a business transaction; it’s a fusion of visions, paving the way for our employees, independent salespeople, and all stakeholders to thrive in an exciting, expansive new era.”

ACN Korea is known as a “Top 20” company in its sector. With this acquisition, both companies will reside under the Neora brand and will work together to create a platform for entrepreneurial growth in direct sales in Asia Pacific.

“I am thrilled to welcome ACN Korea into the Neora family,” said Jeff Olson, Neora Founder and CEO. “The ACN team has built an impressive legacy, and our shared commitment of ‘Making People Better’ aligns perfectly with our global mission. I eagerly anticipate the Emerge Event on February 17, where we can get to know each other better and share our vision for the future. Together, we are poised to build a transformative legacy in the Korean market.”

The post Neora Acquires ACN Korea first appeared on Direct Selling News.

“We’re excited to share our hard-won perspectives and everything we’ve learned in our journey about how to navigate adversity no matter where you are in life,” Amber said. “It will help you find joy in the journey, no matter what roadblocks may come your way, and gain valuable insights with every episode.”   

The podcast will be available across platforms, including iTunes, Spotify, YouTube, Pandora and Soundcloud. 

The post Neora Announces New “Built to Win” Podcast  first appeared on Direct Selling News.

On DSN’s 20th anniversary, we asked industry leaders and legends to share how past evolutions and current opportunities are shaping the future of the industry.

In 2004, Stuart Johnson, now CEO of Direct Selling Partners, Direct Selling News (DSN) and NOW Tech, held a clear vision: to create a monthly publication that offered timely and useful information to direct selling executives. Today, that vision has expanded beyond a print publication to include podcasts, workshops, executive forums and informative in-person events featuring the biggest names in the industry. The format and appearance of the magazine has changed throughout the years, but the original foundation of Johnson’s vision remains unchanged.

As we celebrate 20 years of innovations and insights, we take a look back on a few of DSN’s most important milestones. But even before DSN’s debut in 2004, Founder and CEO Stuart Johnson had an illustrious career influencing the channel. He founded VideoDirect in 1987, which ultimately became VideoPlus and then SUCCESS Partners. He launched SUCCESS Partners University, an education conference for direct selling corporate executives in 2002.

DSN, now in its twentieth year of publication, continues to be the go-to resource for well-researched global industry news, expert insights and interviews with the founders and executive leaders behind the channel’s legacy companies and rising stars.

Deborah K. Heisz, now Neora Co-CEO, and John Fleming, a DSN Legend and former Avon executive, were two of the original staff members tasked with assembling the publication’s flagship print issues.

“At the time, there was no real periodical resource for legitimate news and information for people who were leading and operating direct selling companies,” Heisz said. “People were hungry for a trade journal they could rely on, and we received feedback from dozens—if not hundreds—of executives and owners across the industry letting us know we had truly filled a need.”

From a simple eight-page newsletter to the robust, global magazine it is today, DSN remains committed to supporting, informing, connecting and challenging direct selling executives across the US and around the world.

“I planned to stay for two to three years, but I remained Publisher and Editor in Chief for nine,” Fleming said. “We started by building something relevant and, in many ways, it has become far more relevant than we ever envisioned.”

Twenty Years of Industry-Changing Trends

The past two decades have been host to some of the most dramatic shifts in the channel, including the proliferation of the internet; the broad adoption of mobile devices; and pandemic-induced social distancing that forever changed the way shoppers buy products and interact with brands. With each paradigm shift, the direct selling industry learned to evolve and adapt.

We asked these executives: In the last 20 years, what changes have had the greatest impact on the industry?

“The vast majority of companies started in the industry by sharing products at home parties. Now, we’re sharing the opportunity virtually and across the globe without concern for physical barriers. Digital platforms forced all of us to adjust, while opening up a world of opportunity.”—Mark Pentecost / It Works! Founder and Chairman

“The operating landscape has permanently changed. Millennials want their own gig, but the average direct-to-consumer venture lacks the ability to scale up the way a direct selling company can with sales organizations.”—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“Twenty years ago, signups and applications required a stack of paper. Today, it’s all done digitally. Technology has enabled much more efficient point-of-sale transactions and created the ability to connect and communicate with more people.”—John Addison / Addison Leadership Group; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“The digital revolution of the early 2000s felt, at the time, like a once-in-a-lifetime revolution, but it proved to be just the beginning of an avalanche of technology and business models that would profoundly change the world around us. Through all of these changes–the rise of social media, gig platforms and AI, and the challenges of the pandemic—we have demonstrated that, as a channel, we can adapt and evolve quickly.—John Parker / Amway Chief Sales Officer

“Technology has been the biggest gamechanger for us. I believe you have to have a robust strategy in both automation and face-to-face interactions for success in today’s marketplace. It is a delicate balance. Simplicity and speed can be the difference between success and failure.”—Kevin Guest / USANA Executive Chairman

The Next 20 Years

Lessons from the past 20 years have illustrated that change is not only inevitable; it is a critical part of healthy evolution. It was by welcoming social media, ecommerce and a digital-first footprint that the industry was prepared to not only survive but thrive during the pandemic. And as industry leaders look to the horizon, it will be that same bold approach and nimble, open mindset that will prepare the next generation of direct sellers for success.

We asked these executives: What actions should leaders be taking now to prepare for the future?

“We need to remember what got us here. We have always been an industry that focuses on building people, and then those people go on to build our business. We can ensure our future success by remembering that the most valuable asset any direct selling company has is our loyal, hardworking distributor field!—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“As technology continues to create opportunities and disruptions, I believe the future of direct selling will have to be centered around community and the social dynamic in our businesses. Great products, compelling income opportunities, competitive customer and representative experiences will continue to be basic requirements, but the community and social experiences we offer can be real differentiators.—John Parker / Amway Chief Sales Officer

“We empower women and others to work a meaningful business in pockets of their day. That’s the best part of direct selling. That’s how we win. We must continue to create and emphasize this opportunity—the side hustle is always in style.—Sarah Shadonix / Scout & Cellar Founder and CEO

“Leaders in the channel should plan for growth. Those who stay current by investing in the technologies of today and tomorrow—including new ways to purchase, improve speed to customer and product value—will thrive.—Joni Rogers-Kante / SeneGence Founder and CEO

“Direct selling will continue to thrive where the exchange of value is ongoing and supportive—like in following a nutrition or fitness plan—because of the importance of accountability to achieve success, but we need to acknowledge that affiliate marketing will replace network marketing where the relationship is purely transactional.—Carl Daikeler / BODi CEO

“Personalization and integration of AI in customer service are trends that we find exciting and that we are integrating into our strategy. Direct selling is also very unique; we never work solely online or offline. The future is hybrid, and we are relying on hybrid solutions in our strategy and development to be active pioneers in our industry.—Rolf Sorg / PM-International Founder and CEO

Creating a Lasting Impact

DSN has always strived to stay on the cutting edge of direct selling trends, news and thought leadership through its educational initiatives and events. We asked these executives: How has DSN’s coverage and perspective impacted your businesses over the past two decades?

“DSN has challenged the way I think about our business and the future of our channel. It helps me sift through the hype and understand the real innovations and opportunities that will shape our future. I am so grateful for the connections and insights that DSN has brought to me and our industry.”—John Parker / Amway Chief Sales Officer

“What DSN provides is something critical for the industry: a collegial way to share best practices with one another. One of the great things about the direct selling industry is people’s willingness to share both their successes and failures. DSN gives executives a way to learn and grow their businesses.—John Addison / Addison Leadership Group CEO; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“DSN is a powerful source of knowledge, allowing companies to learn from each other and grow. DSN has always offered great insights and innovative ideas. When there can be criticism of our industry, it’s important to have a platform like DSN to speak of the positive impact we’re having around the world.—Mark Pentecost / It Works! Founder and Chairman

“DSN is an important forum for keeping abreast to fast changing forces and how others are approaching and adapting to remain vital and resilient.—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“The DSN articles and DSU events have been an amazing asset to the corporate leaders of this channel. They both create opportunities to gain valuable information, ideas and strategies, and they give guidance during changing and challenging times.—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“DSN continues to be an important voice and resource for steering the direction of this method of sales and marketing. It’s easy for institutions and regulators to lose sight of the individuals who legitimately use direct selling as their livelihood. DSN helps us all remember who is most important in this industry, and it’s not the company—it’s the distributors and customers.—Carl Daikeler / BODi CEO

“When DSN started, I remember thinking: ‘Finally! One place to get timely, reliable and insightful information on other direct sellers.’ Before DSN, people had to constantly scan multiple sources. It was very easy to miss company announcements and releases because so many direct sellers were private or just starting out.—David Holl / Mary Kay Chairman and former CEO

“DSN is my ‘go-to manual’ when I have questions; seek insight; look for surveys; or simply look for inspiration when I need it. I never throw away a publication, as I know I’ll need to refer to it one way or another. It helps me stay informed and current with what is going on in our channel.”—Joni Rogers-Kante / SeneGence Founder and CEO

“The community gains so much strength when we all work together, and DSN makes that happen. They are invaluable to the ongoing growth and professionalism of this industry, and I am so grateful for their work.”—Michele Gay / LimeLife by Alcone
Co-Founder & Chairwoman

“The coverage of the direct selling landscape in DSN is like no other, providing a clear and nuanced view into an industry that thrives on personal connections and innovative strategies. The articles are a testament to the precise research and commitment to detail that the team embodies, making Direct Selling News an invaluable resource for anyone involved in or interested in the dynamic world of direct sales. It’s journalism that not only informs but enriches and compliments the conversation around this unique sector of commerce.—Rolf Sorg / PM-International Founder & CEO

Building a Legacy Meant to Last

Reflecting on the past 20 years, the DSN team continues to build and plan for an even brighter future with more events, global coverage, expanding platforms and an unflinching grasp of Johnson’s original vision. The next 20 years will expand on that relevancy and commitment, providing more insights, developing broader resources and presenting more opportunities to support the executives working diligently to strengthen and scale the one-of-a-kind entrepreneurial possibilities found within the direct selling channel. 

From the January/February 2024 issue of Direct Selling News magazine.

The post Cheers to 20! first appeared on Direct Selling News.

But how do you turn all of that learning into action? The key is to pin down a handful of revelations that rose to the top, and then do something with them! In an effort to help us all take action, whether you were there or not, here are the next steps I would encourage any executive to take, inspired by Fall DSU 2023. 

1 / Get Serious About the Hispanic Market

The most blatantly clear takeaway from DSU was a lot of companies growing in the US have one thing in common: a commitment to the Hispanic market. This was a key point in about four different presentations. Whether you decide to target the Hispanic market or not, every executive needs to be intentional about how you’re thinking about this market, both globally and especially in the US.

2 / Simplify until It Hurts

John Alcala, CEO of It Works!, reminded us of just how much distributors have on their plates…and that’s before we add all of our stuff (promotions, incentives, announcements, launches…) to the mix! We all talk about simplifying our business, but do we really do it? To experience the kind of simplicity that actually prompts growth and duplication, you’ve got to shed some of the secondary “stuff” that only gets in the way for the average distributor. Go find it and do something about it.

3 / Experiment, Learn and Adapt

pawTree Founder and CEO Roger Morgan walked us through a few scenarios where the company identified a problem; came up with a possible solution; and launched quickly. Some worked well; some didn’t; and some only worked within very specific circumstances, but not others. The takeaways from his specific examples were helpful, but the biggest takeaway is this: am I tracking everything I do well enough to know if it works and why? And then do I keep iterating to see the improvement?

4 / Compare Your Business to Neora

A huge perk of DSU was hearing from Founder and CEO Jeff Olson and Co-CEO Deborah K. Heisz from Neora about their journey in their case against the FTC. The work they’ve done is so vital for every single one of us—both in terms of validating what we do and also shedding light on how we should do it. But in Stuart Johnson’s words, “If you’re still doing things the wrong way, this is not a win for you!” Deb shared some of the elements of Neora’s business (like 80 percent of those who buy from them are Customers and receive no commission) that strengthened their case. It’s in no way the hard-and-fast rule that must be followed, but if you need a standard to compare yourself against, it sounds like we just got a new one.

5 / Start Using AI (whether you want to or not!)

I’ll admit I’ve been slow to jump on the AI bandwagon. It can feel a bit overwhelming to understand. And it can feel like “just one more thing,” when I’ve already got enough “things” in my life. But after listening to Blake Mallen and Brandon White talk about how they’re putting AI to use right now, I realized my excuses hold little weight compared to the unbelievable benefits that can come from incorporating AI into how I work and live. Rather than figure it all out, I’m simply dedicating 15 minutes a day to using AI in some form or fashion. It’s the only way I’ll learn it and appreciate it. Maybe you should, too.

6 / Success Is in the Segmentation

No single speaker focused on segmentation as a topic, but many alluded to it. Bridgehead Collective’s Founder and CEO Heather Chastain’s generational research certainly shines a bright light on the need for us to segment what we do. The panel on affiliate programs (and how different each program is) certainly showcases how companies are trying to segment the opportunity in new ways. We even learned of the differences among segments within the Hispanic market. We can all do a better job of segmentation. Whatever is holding you back—technology, resources, know-how, WHATEVER!—let’s make 2024 the year we do something about it.

7 / What We Do Still Matters

Vivian Mokome, Founder and CEO of Vivian Mokome Projects, shared a heartfelt reminder that direct selling changes lives…and, in her estimation, can change continents! She sees direct selling as a prominent force for change in Africa. We must evolve as a channel and respond to the market in terms of what it wants and how it wants it. But we cannot lose sight of the actual life changes that have occurred and continue to occur, no matter how tempted we may be to downplay it in the midst of so many changes. Remind yourself of the greater good your company pursues and provides regularly. There’s no other fuel like it.

Were there more takeaways at DSU? You bet!
This is just a starting place. If you were there, think back to the points above in context of your own experience and determine what makes sense for your company. If you weren’t there, this list can still prompt extremely helpful conversations for your team. And bring them to DSU 2024! DSN

Note from the Editorial Staff: We’re excited to include these insights from industry expert Brett Duncan. Look for more content from Brett in the coming months on the pages of DSN.

Brett Duncan specializes in helping direct selling companies evolve into modern social selling models while still maintaining the culture and essence of who they are and what makes them different. He is Co-Founder and Managing Partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps.

From the December 2023 issue of Direct Selling News magazine.

The post 7 Top Takeaways for Executives from DSU Fall 2023 first appeared on Direct Selling News.

While Neora’s win was a decided victory, there was still question as to whether the FTC would choose to appeal the ruling. As of this week, the deadline for submitting a notice of appeal has now passed, solidifying Neora’s victory and the new legal precedent their case now presents.  

“This is the first time that a direct selling company has ever defeated the FTC’s pyramid scheme claims in a court trial.” declared Ed Burbach, Chair of Foley & Lardner’s State Attorneys General Practice.

“Neora’s resounding victory against the FTC is an important, preliminary win for the industry that rejects many of the FTC’s theories for attacking legitimate direct selling companies,” said Katrina Eash, Partner at the Winston and Strawn Law Firm.  “Neora fought the battle for direct sellers everywhere, proving that when you build an ethical company and you’re willing to give everything you’ve got to defend that company and its distributors, you can do direct selling right.” 

The post FTC Elects Not to Appeal Neora’s Landmark Win  first appeared on Direct Selling News.

Direct selling is changing. The channel continues to grow, evolve and expand to include new models under the umbrella term of direct selling. Some of these innovations—like affiliate programs—offer real opportunity and welcome new participants into the channel.

But not every opportunity stands up to scrutiny. At a recent industry event, executives from over 30 direct selling companies shared their concerns regarding Master Resell Rights (MRR). MRR is a type of licensing agreement in the digital product industry. It grants the licensee the right to sell a digital product and they in turn can resell that right to others.

MRR often takes the form of online training courses focused on building lucrative online brands and businesses—an enticing pitch to aspiring entrepreneurs and influencers. And while the selling points for purchasing these courses (typically in the $500 range) are intriguing, this “opportunity” could easily be characterized as nothing more than a digital chain letter.

At first glance, it sounds like a great fit for affiliates to grow their reach and reputation by marketing an online course that teaches others how to replicate their success. But it’s far more complicated than it appears and comes with its own substantial set of concerns that’s currently creating chaos and confusion in the channel.

Because of its disruptive nature and the potential problems it presents for distributors and—in a broader sense—the channel itself, Direct Selling News reached out to attorneys that represent and advise direct selling companies as well as channel executives to better understand what MRR is; what it isn’t; and exactly what kind of havoc it can create.

Ethical Concerns

MRR is a licensing arrangement in which the holder of MRR can resell a product and often pass on the resell rights to the buyer. These products can include ebooks, software, training courses, templates and various digital goods. Although this is a relatively new opportunity being marketed to distributors, attorneys specializing in direct selling have already expressed concerns about MRR.

Brent Kugler, a Partner at Scheef & Stone whose practice focuses on representing direct selling, MLM and network marketing companies in lawsuits, arbitrations and regulatory matters, shared his thoughts on the potential pitfalls.

In his opinion, an MRR program, depending on the purchase price and how it is marketed, may violate the Federal Trade Commission’s (FTC) business opportunity rule or state business opportunity statutes. “This creates potential significant liability for the seller unless the seller adheres to the extensive and burdensome disclosure requirements,” Kugler explained. “And because MRR is essentially a one-time sale of a training module, there is no residual income element. In many MRR programs, recruitment of others doesn’t provide any opportunity for additional income.”

A more practical concern Kugler expressed was financial in nature. “Due to the cost and non-refundable nature of MRR programs, it can be anticipated that a great number of purchasers will not recoup their purchase price.” Kugler also noted that intellectual property issues related to content exist. “Most of the MRR sale terms and conditions I have reviewed do not contain language that sufficiently protects the purchaser from third-party intellectual property infringement claims.”

Katrina Eash, Partner at Winston & Strawn who concentrates her practice in complex commercial, class action and intellectual property litigation, shared her thoughts. “Distributors must understand the terms of the license they receive as those terms greatly impact how the product can be used, distributed and/or modified,” she explained. “Distributors need to understand whether, and to what extent, they’re required to credit the creator of the product. And distributors should watch out for—and avoid—creation of derivative works (if not permitted) and potential trademark/copyright infringement. These are just a few of the more prevalent intellectual property concerns surrounding master resell and private label rights. A misstep with any of them could result in costly legal ramifications.”

Considering recent wins direct selling has had against the FTC, any activity that draws the scrutiny of the agency or presents regulatory challenges can only harm the channel and the people that rely on it for their livelihoods.

False Claims, False Expectations

Another important thing for participants to understand is that the distributors who would have an audience for these kinds of training products already have a sizeable following. So, while field leaders with thousands of people in their team might pressure their downline to purchase the courses, it is difficult if not impossible for a smaller distributor to replicate that success or make any money at all. There is no one for them to sell it to that the bigger distributor hasn’t already solicited. And the longer it goes on, the less opportunity exists.

It’s easy to see why industry executives are concerned and advising their field to avoid the temptation of MRR. Amber Olson Rourke, Chief Marketing Officer at Neora said, “Selling a video course for close to $500 when you could find very similar content on YouTube for free is a risk. Is it possible to get some ‘quick income’ from this? Sure. But is the risk to your reputation and the distraction, confusion and disruption this will cause to your main business worth it?”

Aspen Emry, Founder and CEO of Bravenly Global shares Olson’s concerns. “it’s a HUGE distraction. MRR is appealing because it seems quick and easy, and distributors don’t have to do the training and teaching components of building a team. What concerns me is that the pitch often bashes direct selling by saying things like ‘If you’re tired of MLM’ or ‘Want to make quick money without MLM?’. It’s deceptive and preys on people who just need time to learn the direct selling business and build something sustainable. The kind of fast money that’s being promised is not achievable for most people.”

Taking a Stand

Many executives, concerned about the impact MRR could have on their hard-working distributors, are taking proactive measures, including amending their policies and procedures to limit the damage MRR can do. As one executive explained, “We’re adding more restrictions because we feel like it is damaging the field and preying upon them as well. It creates a massive breeding ground for cross recruiting. These courses and email chains are a real threat to distributors.”

Melissa Thompson, Founder and CEO of BELLAME, explained her company’s approach. “We allow our Partners to represent multiple brands without restriction,” she said. “Nonetheless, we’ve established guidelines to maintain our community’s integrity. Challenges for our field have been centered around unethical behaviors of those marketing the MRR—not necessarily the MRR business itself. Many Brand Partners have reported unwarranted solicitation where their upline is harassing them to invest in an opportunity to get rewarded with big money for little to no work. Our current policies and procedures have been sufficient in addressing these issues.”

For companies looking for guidance in their own policies and procedures surrounding MRR, Kugler offered the following. “A lot of companies have policies in place prohibiting the sale of non-company training/marketing materials. A well-drafted non-solicitation policy that includes MRR within the definition of other ‘direct sales business opportunities’ can also be effective.”

Danger Ahead

Affiliate marketing and MRR are distinct business models. The simplest explanation is that in affiliate marketing you act as a promoter and earn commissions, but you don’t own the products. It’s a longer-term, more sustainable opportunity. While some affiliate marketers may be intrigued by the concept of adding MRR to their businesses, there are many valid reasons to avoid them.

More Resources
Affiliates are focused on promoting for a reason—they have a loyal audience, charisma and are natural born salespeople. They are sharing products and services they know, love and trust. MRR products require more involvement in product ownership, quality control and customer support, taking time away from the critical, income-earning tasks related to promotion and sales.

More Oversight
MRR products come with reselling rights—but they also come with responsibilities. With direct selling, affiliates never have to assume responsibility for product development or quality—it’s all done for them. With MRR, they must assume that responsibility.

Lower Quality
The quality of MRR products varies widely. Some may be valuable, but many are poorly made or outdated. Customer trust is key for affiliate success. Affiliates need to promote products of consistent quality to maintain credibility and trust.

Intense Competition
Identical MRR courses can be sold by multiple people within the same community, which can quickly lead to overlap; mixed messaging; and market saturation. It can be very difficult to stand out in a crowd when these rights are sold repeatedly.

Additional Time and Tasks
MRR products may require affiliate marketers to provide customer support. Managing inquiries, issues and refunds can be time consuming, distracting and impact the bottom line.

Brand Consistency
Direct selling companies often have specific branding, marketing and product strategies affiliates and distributors are expected to follow. Introducing MRR products with different branding and lower quality standards can quickly dilute brand identity or imply endorsement.

Ethical Concerns
Direct selling companies often have a strong focus on ethical business practices and long-term customer relationships. Some MRR practices, especially those associated with low-quality or unethical products, can contradict these principles and damage reputations.

Customer Disappointment
When MRR products fail to meet consumer expectations, it can result in dissatisfaction and negative reviews, potentially harming the reputation of the affiliate/distributor and the direct selling company.

Lasting Opportunity or Passing Fad?

MRR is not the first (or last) “easy money” opportunity to distract, discourage and ultimately disappoint distributors. Many other schemes with unsubstantiated promises of big money with little effort have made an initial splash then quickly crashed and burned.

And although it hurts the companies, it hurts distributors even more—especially those just starting to build their businesses. It diminishes belief; damages reputations; depletes resources; and distracts from the legitimate, long-term opportunity direct selling represents.

As Emry shared, “I don’t see MRR as a long-lasting income opportunity. With no duplication and zero residual income off the sales of others, eventually distributors will run out of people to sell it to because the average person doesn’t have unlimited leads.” 

That sentiment is echoed by Kugler. “MRRs are bright shiny objects for distributors to be attracted to (and distracted by) only because they feel they can generate income from the sale to their downline participants. This is a fad, and it will pass. But—in the meantime—companies can adopt policies to prohibit the promotion of MRR within the sales network or enforce existing policies that prohibit the sale of marketing programs to other participants.”

Ultimately, these measures protect both the field and the companies they represent. While MRR sounds like a great opportunity to build an affiliate’s sphere of influence and make money quickly, any success found from selling MRR is likely short-lived and disruptive to the community and the channel.

In many ways it flies in the face of the time-honored strategies and philosophies that lead to long-term direct selling success. As Olson Rourke summarized, “Those chasing instant gratification are robbing themselves of the sustainable success that comes from disciplined daily action.”

Key Distinctions

It’s important to understand the structural and philosophical differences between affiliate marketing and MRR. We’ve highlighted three components of both.

Affiliate Marketing

1. Commission Based
   Affiliates earn commissions by promoting and selling products or services owned by other companies. Their role is to drive traffic, generate leads and facilitate sales. They are often given additional perks for sales goals and provided ongoing support from the companies to achieve those sales goals.
2. Promotion and Marketing Focus
   This model allows affiliates to capitalize on their existing strengths and assets to focus on promotion and marketing. By leveraging their existing blogs and social media presence, affiliates attract customers to the brands they have chosen to partner with—brands that clearly align with their existing values and interests.
3. No Ownership or Oversight
   Time-, labor- and resource-draining components of doing business such as product development and customer service and support are handled by the parent company. Affiliates can concentrate on what they do best—making sales (and commissions).

Master Resell Rights (MRR)

1. Product Ownership
   Participants own the product (within the bounds of the licensing terms). Specific terms and conditions vary from one product to another, and it can be difficult for participants to fully understand their limitations and ramifications.
2. Questionable Quality
   The quality of MRR products varies dramatically. Because this is a one-time purchase and not an ongoing relationship, participants cannot influence the quality or type of products being produced. It’s up to them to find the right fit for their audience, which can be a time-intensive process.
3. Market Saturation
   MRR creates chains of reselling rights, which can quickly result in over saturation if not managed properly. There is no opportunity for residual income, and the market for these products diminishes over time as many people in the same circle are selling the same one-time opportunity.

The post Too Good to be True? first appeared on Direct Selling News.

In a ruling that will surely be referred to as the new legal precedent, Neora has emerged victorious from its lengthy battle with the Federal Trade Commission (FTC).

After seven years of investigation, four years of litigation and three years of negotiations, during which the FTC insisted on a nearly complete erasure of the company’s multilevel marketing structure, the court has rejected all of the FTC’s claims against Neora.

“This is the first time that a direct selling company has ever defeated the FTC’s pyramid scheme claims in a court trial.”

–Ed Burbach, Chair of Foley & Lardner’s State Attorneys General Practice

“The FTC had a pre-conceived notion of who Neora was, and despite undisputed data proving they were wrong, they decided to proceed with an unfounded narrative,” said Deborah Heisz, Neora Co-CEO. “Their entire case revolved around one thing: their opinion that paying multiple levels of people commission on a product sale to a customer is paying for recruiting and not for product sales. That is simply not true and not the law.”

The New Precedent

For more than four decades, the FTC has adopted the Koscot Test, which identifies pyramid schemes as those who reward recruiting alone by paying commissions unrelated to the sale of a product to ultimate users. But the laws surrounding direct selling can be vague and the FTC leaned into this during the trial, with their expert witness stating under oath that “there is no test, mathematical or otherwise” to apply to determine an “overemphasis” on recruiting in direct selling.

With this lack of clarity, even direct selling companies who design their infrastructure to prioritize product sales, like Neora did from the very beginning, are not immune from FTC scrutiny.

“Neora’s resounding victory against the FTC is an important, preliminary win for the industry that rejects many of the FTC’s theories for attacking legitimate direct selling companies.”

–Katrina Eash, Partner at the Winston and Strawn Law Firm

“Direct sellers have been operating under a shroud of uncertainty for decades, wondering if they were going to be the next target of the FTC’s ever-changing interpretation of what it means to be a pyramid scheme under Koscot and the rules governing improper claims,” said Katrina Eash, Partner at the Winston and Strawn Law Firm. “Neora’s resounding victory against the FTC is an important, preliminary win for the industry that rejects many of the FTC’s theories for attacking legitimate direct selling companies. It’s unclear what the FTC will do next, whether the FTC may choose other jurisdictions it deems more favorable for future suits, or whether the FTC will continue to experiment with other weapons in its arsenal, such as its rule making authority. But one thing is for certain, Neora fought the battle for direct sellers everywhere, proving that when you build an ethical company and you’re willing to give everything you’ve got to defend that company and its distributors, you can do direct selling right.“

Just as the Koscot test and Amway’s win against the FTC more than 40 years ago shaped the legal landscape for the direct selling industry, so too will Neora’s hard-fought win determine how the FTC can legally pursue companies in the future.

“This is the first time that a direct selling company has ever defeated the FTC’s pyramid scheme claims in a court trial,” said Ed Burbach, Chair of Foley & Lardner’s State Attorneys General Practice and Lead Counsel for the trial. “It is also the first significant victory of its kind since Amway’s 1979 administrative law defeat of the FTC.”

The Future of the Industry in the Balance

The words “no evidence” consistently appeared in response to the FTC’s allegations, but the FTC’s bottom line during the trial was this: Any distributor who purchases product but does not earn commission is being harmed. What’s more, in the FTC’s eyes, those product purchases were considered a business expense, or net loss, regardless of whether the individual behaved as a customer. But this assertion does not take into account the number of reasons people choose to sign on as a distributor, like product discounts or early access to sales.

“We really had no choice but to fight.”

–Jeff Olson, Neora Founder and CEO

To support its claim, the FTC called on an expert behavioral economist who stated that Brand Partner purchases could never be considered ultimate user sales. The court fully rejected the testimony, saying it consisted of “rigid theoretical assumptions” that were not “borne out in reality” and stated that “it cannot be simply assumed that the 70 percent of Neora Brand Partners who never made a sale or earned a commission are disappointed victims of an illegal pyramid scheme simply because they never made a sale, recruited another Brand Partner, or earned a commission.”

“The fact that the vast majority of Neora’s product sales are to satisfy genuine consumer demand, and not as part of a business opportunity, fatally undermined the FTC’s pyramid scheme claim,” said Maureen Ohlhausen, Chair of the Global Antitrust & Competition practice for Baker & Botts law firm, and a former FTC Commissioner who advised Neora during mediation discussions with the FTC. “The court looked to the FTC’s own previous guidance about pyramid schemes, which distinguished between purchases made to satisfy personal demand and those that are simply incidental to the business opportunity and recruitment plan. Because 90 percent of Neora’s revenues come from ultimate user sales, the court determined that Neora does not operate like a pyramid scheme because it does not focus on recruiting as opposed to sales and does not depend on the continual recruitment of new members for its continued existence.”

Neora’s executive team now believes the agency’s commitment to these allegations wasn’t just an attempt to topple their company, but rather a way to target the entire channel and maybe even the independent contractor status as a whole.

“We didn’t just protect our employees and Brand Partners; we protected other industries,” said Jeff Olson, Neora Founder and CEO. “We really had no choice but to fight. I have been in direct selling for nearly 40 years, and my goal when we started Neora 12 years ago was to design a business around high-quality products and provide an opportunity to our Brand Partners without any of the ‘gotchas’ that can show up in the direct selling business. And that is exactly what we did. This was a hard-fought victory for our Brand Partners, employees and direct selling overall.”

“Before we made our first sale 12 years ago, we spent a lot of intentional time defining our core values,” said Amber Olson Rourke, Neora Co-Founder and Chief Sales & Marketing Officer. “A company’s core values are words on a paper until life presents you with hard choices. It is in those moments where you prove if you are going to live out your core values at all costs. We never wavered in making this decision to fight because any other decision would mean walking away from our core values, and the Brand Partners who helped build this company.”

Protect through Preparation

How can we protect our company from scrutiny? That question is at the top of direct selling executives’ minds right now. For Neora, a foundation of transparency and what the court described in its ruling as a “rigorous” and “robust” compliance program, as well as “proactive efforts” to prevent misleading representations about potential income or product claims, made a significant difference in the outcome of their trial.

“I am privileged and proud to have been a part of fighting the FTC on behalf of Neora, our Brand Partners and ultimately the direct selling channel, which I love.”

–Deborah Heisz, Neora Co-CEO

But this multiyear battle is a reminder, Neora’s executive team says, that there is no one tried and true template for staying out of the FTC’s crosshairs. Instead, they advise other executives to build with integrity, implement a strong compliance program and develop true product demand.

Then—be prepared to defend it.

“Every commission we have paid was because of the sale of a product, and almost 80 percent of our total revenue comes from non-distributor customers,” Jeff Olson said. “They had that data for two and a half years before we sued them. We were able to do that because we set the company up right from Day One.”

A Future Worth Fighting For

The collateral damage from a fight with the FTC is high, even when it ends in a landslide win. The looming outcome of the case has been a significant distraction that required immense time and financial resources and created a hefty mental and emotional burden for the executive team. But Neora’s customer base has been loyal, helping the company record some of its highest growth years even amid the years-long trial.

The FTC lost this case but, in many ways, it is still getting what it wants. The channel is much more product focused than it was a decade ago, and the quality of those products is increasing.

Recruitment models are no longer the norm and the industry’s signature multilevel model is being remodeled to include the affiliate and customer acquisition approaches. But for all of these changes, Neora’s victory has sent a clear message to the more than 1,000 direct selling companies in the US: direct selling is a legal and protected path to entrepreneurship.

“I am privileged and proud to have been a part of fighting the FTC on behalf of Neora, our Brand Partners and ultimately the direct selling channel, which I love,” Heisz said. “I am not surprised we won and that the courts upheld existing law. We knew from the start that we could win and that this was a fight worth fighting. We operate a good company that follows all of the FTC guidance and case law that pertains to direct selling. It was clear to us that the FTC was using our lawsuit, and others in our space, to attack the industry. I am so glad we had the facts on our side.”

“We are more excited than ever to share the story of Neora and the impact we have made,” Amber Olson said. “We had a historic launch in this industry, and our next chapter will make an even bigger, lasting impact.”

Judgement Summary

The Court confirmed Neora’s business model is legitimate

• 90 percent of total product sales in 2021 went to customers estimated for personal use
• There is a legitimate and substantial customer demand for Neora’s products
• 75-80 percent of sales are made to customers who have no incentives tied to the compensation plan
• Neora’s profits do not hinge on recruitment of new participants

The Court acknowledged the value of being a distributor—even without earning commission

• In light of discounts, Brand Partners may recoup their enrollment cost
• Receiving valuable goods in return for money does not characterize an expense as a loss

The Court deemed Neora’s compliance program effective

• Neora showed evidence of a “rigorous compliance program”
• Neora made “proactive efforts” to stop problematic Brand Partner claims
• There was no evidence of “defects” or “blind spots” in Neora’s compliance program

The post Victory for Neora first appeared on Direct Selling News.

Neora’s ultimate landmark victory, during which the courts rejected all of the FTC’s claims, is a reminder of the importance of clear legal standards. 

“We hope yesterday’s decision in the Neora case will help provide clarity about the direct selling business model to regulators, consumers, and the public,” said Joseph N. Mariano, DSA President and CEO. “The court cited the company’s robust inventory repurchase agreement and strong compliance efforts that all DSA members abide by. The decision reinforces the importance of these principles as core tenets of consumer protection and Neora’s adherence to them as part of their membership in the association.” 

The post DSA Applauds Neora’s Compliance Efforts  first appeared on Direct Selling News.

“We are thrilled with the judge’s ruling, which affirms what we have known all along – that Neora is an ethical company,” said Deborah Heisz, Neora’s Co-CEO. “Our brand partners have worked diligently to build their businesses and this ruling is a testament to their hard work and dedication. We are proud to be part of an industry that empowers entrepreneurs – especially women – and creates real opportunities for success.”

Heisz continued, “Throughout this experience the FTC tried to strong-arm us into agreeing to impact the livelihood of tens of thousands of our brand partners. They didn’t want us to pay any commission to anyone other than the person making the sale, preventing us from rewarding our sales leaders in any way. There is no case law, rules or regulations that support the FTC’s demands. We would not acquiesce and instead chose to fight for the rights of our brand partners and became the first and only direct sales company to take this issue all the way through federal court with a favorable ruling.”

A Powerful Precedent

Neora’s executive team believes this government overreach poses a considerable threat to American entrepreneurs, but that this landmark victory will set a powerful precedent for protecting the rights of legitimate direct selling companies, as well as small business owners in other industries.

“When we proactively filed suit against the FTC on November 1, 2019, challenging the overreach of the FTC, we knew we would have a battle on our hands, but we were supremely confident that the facts and data would show the truth,” said Jeff Olson, Neora’s Founder & CEO. “Living out our mission statement of making people better sometimes means taking the road less traveled, making the hard choice to defend what is right at all costs. This isn’t just a win for our industry, it’s a win for American entrepreneurship.”

Olson continued, “Because Neora has always been built on a solid foundation with science-based products that bring true value to the market; a massive non-distributor customer base that represents nearly 80 percent of the company’s total revenue; and a modern ecommerce sales system that removes the needs for brand partners to carry inventory or incur unnecessary extra costs, we were able to take on and win this important fight.”

This multiyear effort has been a tangible illustration of Neora’s commitment to defending its brand partners through integrity, and the company remains dedicated to continuing and expanding its already robust approach to accountability and transparency.

Staying the Course. Growing Forward.

Heisz shared that the vast majority of its field leaders stayed with the company throughout the course of this trial and have even experienced some of their highest growth periods. All the while building an even stronger customer base because of its strong product portfolio. In the wake of a landmark win, she is even more optimistic about the future of Neora.

The post Neora Wins Landmark Case Against FTC first appeared on Direct Selling News.

Included in the list are global powerhouse brands, including Procter & Gamble at number one. Among these household names, ten direct selling companies were listed, including Amway and Mary Kay (tying for #10); Young Living (#14); Rodan + Fields (#17); Nu Skin (#19); Neora (#22); Scentsy (#24); Melaleuca (#30); Alcora, the parent company of MONAT Global (#38); and Jeunesse (#50). 

The post Happi Names 10 Direct Selling Companies to List of Top 50 Recession-Proof Companies  first appeared on Direct Selling News.