Bozeman, Mont.—Sageant has launched a national grassroots campaign to secure responses to the recently proposed Federal Trade Commission (FTC) new rule on business opportunities that threatens the network marketing/MLM industry. If not modified, the rule would present a significant entry barrier to any company or distributor recruiting new distributors. The public has until Friday, June 16 to submit comments.
The FTC proposed rule has five required disclosures that must be made in writing at least seven days in advance of the individual’s agreement to enroll as a distributor. This, in essence, creates a “seven-day waiting period” for anyone attempting to sign up a distributor. In this scenario, the distributor would literally close a sale twice, once when they submit a disclosure statement and then again 7-days later. Under the proposed rule companies or distributors would have to provide the disclosures on estimated earnings, legal actions, cancellation or refund policy, and references. If the company or representative makes a verbal or written statement, whether as general as “earn more income” they would have to provide an earnings income statement as one of the disclosures. Upon request, they would have to also provide written substantiation. Additionally, if a company or its executives were involved in criminal or civil litigation involving fraud or misrepresentation in the last 10 years and were found guilty or innocent or if the parties settled out of court with no admission of guilt, the company or distributor would have to disclose it. Lastly, a distributor would be required to provide the references of 10 purchases closest to you along with their contact information thereby subjecting them to the likelihood of marketing from competing companies.
Considering the entry fee to become a distributor can be as low as $20, many industry experts and associations view these disclosures and the seven-day waiting period as a significant burden and entry barrier. The Multi-Level Marketing Industry Association, Distributors Rights Association, noted MLM trainer Tim Sales, Constitutional Law expert Jonathan Emord and MLM consultant Rod Cook are urging public comment.
“We respect the role of the FTC and support their efforts to protect consumers against misleading advertising. However, this proposed FTC rule, if not modified, would be a significant burden to the ability of network marketing companies and distributors to conduct their business and ultimately harms the consumers they’re trying to protect,” said Kelly Gaisford, president of Sageant. “Sageant is taking a leading role in protecting the network marketing industry and the rights of distributors while advocating for meaningful and fair modifications.”
Sageant has created an FTC Grassroots Action Center at http://kore.sageant.com/actioncenter/ to help distributors and network marketing companies easily respond to the new rule. At this site there is the entire proposed FTC rule, guidelines to understand and to submit comments as well as a draft letter that can be modified when submitting comments.
“Network marketing is about individual distributors taking control over their financial life and creating opportunities. It’s premised on the individual making a difference and so is our free market economy and form of government,” said Henry Kriegel, Director of Marketing for Sageant. “We created the Grassroots Action Center because distributors can make an important difference, to help change the FTC rule and protect their livelihood.”
About Sageant, LLC
Sageant was founded in 2002 by Kelly Gaisford, a formulator, product innovator and manufacturer with more than 20 years experience in the nutrition business industry. Sageant offers a full line of anti-aging nutritional supplements that energize, feed, and protect health at a cellular level as well as supplements for specific health challenges. Last year, Peter Spiegel, a direct response television marketing leader, joined Sageant as its Chairman and CEO. In May 2006, Spiegel, who has sold more than $3 billion of products through direct response TV, and Kelly began launching the first in a series of health products through TV infomercials that will also be available through its independent distributors. Henry Kriegel, Sageant’s Marketing Director, helped launch the first grassroots Lobbying Day for the natural products industry in 1992 that contributed to the passage of DSHEA.
About Network Marketing
Network marketing is any form of marketing that allows independent distributors to recruit other independent distributors and to draw a commission from the sales of those recruits. Network marketing has penetrated the mainstream and is a growing industry with more than 13 million Americans involved and with distributors in all 50 states. Sales of all products and services reached $29.6 billion in 2003, according to the Direct Selling Association. Sales of dietary supplements through direct selling/network marketing reached $3.8 billion in 2004. Network marketing is used by blue-chip corporations including Citigroup, MCI and IBM. Some network marketing companies are publicly traded on Wall Street including MannaTech, Herbalife, Nu Skin, Pre-Paid Legal Services, USANA and others. Top business management leaders and New York Times best-selling authors Robert Kiyosaki, Paul Zane Pilsner, and Steve Covey have endorsed network marketing.
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Henry Kriegel 406-522-9971