International Law

MLM Danger of Autoship Programs

Image via Wikipedia

Rachel, writing at Op Tree, unwittingly described a legal trap for network marketers, the autoship program:

"Reliv International has just launched a new auto ship program that they hope will increase customer retention and enables its independent distributors to increase sales and build stronger, long lasting relationships.

The new Direct Advantage Autoship Program will work like other used by many other Network Marketing Companies and will allow consumers to receive their orders on a regular monthly basis.

The Autoship Program will hopefully eliminate or reduce time spent on filling orders, and will allow distributors the opportunity to focus on attracting

"This is a win-win for distributors and customers," said Scott Montgomery, chief operating officer and executive vice president of Reliv.

"Customers never run out of their favorite Reliv products, plus they receive a discount on their orders. Distributors build a stronger customer base and garner new opportunities to increase sales and expand their organizations.""

The problem with this scheme is that once a distributor signs up for an autoship program, their legal relationship with the company may change.

They may go from an independent distributor to either a business opportunity purchaser, or even franchise purchaser.

Each of these types of purchasers is entitled to significantly more information from the seller than is typically given.

For example, in the recent lawsuit against Your Travel Biz, the AG of California sued YTB not only for being an endless chain, but also as being an unregistered seller of marketing plans, and an unregistered seller of franchises.

Either legal hook will catch you: so beware of the autoship option, you just might be a franwhack waiting to happen.

Full post as published by Misleading Advertising Law on August 22, 2008 (boomark / email).