State MLM Laws

MLM Laws in 50 States

MLM Laws in 50 States

Every state adopted laws regulating MLM companies. Although much enforcement activity has come from the federal government through the FTC, SEC and US Postal Service, the vast majority of enforcement activity has occurred at the state level. The following is a discussion of state MLM laws, including pyramid statutes, endless chain statutes, lottery statutes, sales referral statutes and multilevel distribution statutes. It is followed by actual MLM legislation in the various states, plus Peurto Rico and Guam.

BurnLounge Appeal Decision

FTC v. BurnLounge [PDF]

Guidance on Pyramid v. Legitimate MLM and the Role of Personal Use in Pyramid Analysis

On June 2, 2014, in the case of FTC v. BurnLounge, the U.S. Court of Appeals for the Ninth Circuit issued a seminal decision, affirming a lower court finding that the BurnLounge MLM (multilevel marketing) program was an illegal pyramid scheme, in violation of section 5(a) of the Federal Trade Commission Act, a decision that will dramatically impact the landscape of direct selling to provide guidance on two fundamental legal issues: (1) What activity constitutes a "pyramid scheme?" (2) What is the role of "personal use" (by distributors) in pyramid case analysis?

The Amway Case

The Landmark Amway Case

No legal ruling has had more impact on the direct sales industry than the landmark FTC v. Amway decision. In 1975, the FTC accused Amway of operating as an illegal pyramid. After four years of litigation, an administrative law judge ruled that Amway's multilevel marketing program was a legitimate business opportunity as opposed to a pyramid scheme.

FTC vs. FutureNet

Stipulated Final Judgment [PDF]

FTC Press Release

FTC vs. FUTURENET

Like a drumbeat, the direct selling industry has heard again from the FTC. Same scenario, same song - no notice, restraining order, asset freeze, receiver, settlement quickly reached under duress. Can existing companies draw guidance from the Futurenet case? Maybe we're making some progress..

The AuQuest Case

THE AUQUEST CASE: A WAKE-UP CALL TO THE INDUSTRY

As reported in the December issue of Money Makers Monthly, the AuQuest Case could have a big impact on future legal trends and interpretations for network marketing companies.

Also included in this report is the actual text of the court documents in the AuQuest FINAL JUDGMENT AND PERMANENT INJUNCTION.

FTC vs. JewelWay

FTC Vs. JewelWay - New Concerns For The Industry

"The FTC does a disservice to the industry and itself through ambush litigation, in which restraining order receivers are put into place without any prior notice and any dialog with the companies." Take a look at important comments regarding the recent action taken by the FTC against JewelWay - and understand the implications on the entire industry.

US vs. Fortuna

Off-Shore MLM - US vs. Fortuna

"Start-up companies that go off-shore sometimes have other [than legitimate] intentions that may revolve around tax evasion, hiding of assets, and attempts to evade regulatory controls for opportunities offered in the United States." What does the recent action by Fortuna Alliance's founders portend for MLM regulators and the industry?

FTC v. Equinox - Deja Vu

FTC v. Equinox - Deja Vu

The Equinox case may provide a window of opportunity for both the FTC and the industry to focus on specific practices that are objectionable. At the same time, the industry (and in particular, the DSA) should take the case as a wake-up call that its future will be even less secure if it does not seriously dialog with the FTC on the two issues of "trial by ambush" and "personal use" by distributors as a part of the direct selling business model.