International Law

Direct Sellers Happy to Toe the "Party" Line

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I had the opportunity today to have a wonderful conversation with Robert FitzPatrick, who writes at False Profits, who was in Toronto over the weekend.

We discussed biz op fraud and mlm fraud.

Generally, we concluded that the mlm companies who were members of the Direct Sellers Association were primarily in the "selling the dream" business.

They no longer sold products directly to the public; they sold earning opportunity dreams to potential distributors.

Now consider this article about mlm.

"The combination of time-crunched consumers and a need for inexpensive luxuries seems to create an ideal environment for in-home parties, with more and more marketers seeing an opportunity to target consumers in a recession with convenient, in-home, personal service for generally affordable products.

"Twenty or so years ago, it was thought that direct selling was countercyclical, that it did better when the economy was down and vice versa," said Amy Robinson, VP-communications and media relations for the Direct Selling Association.

"Now we see that it tracks more with the economy -- with the exception of times when there is a true recession. ... We've seen anecdotal evidence for the third quarter that that bump is beginning to happen."

The direct-selling industry -- 67% of which is in home -- totals about $31 billion annually in the U.S. and employs an army of 15 million salespeople.

Tupperware, the king of the at-home-party industry, has seen an increase of almost 10% in new recruits in the past three months, as well as a 40% increase in directors and a 30% increase in the number of parties given in Hispanic regions.

Tupperware Brands CEO Rick Goings said part of the reason for the success is that Tupperware has transformed and modernized along with its customers and is no longer just about selling "milky-white burping bowls."

Rick Goings has presided over the transformation of Tupperware being a legitimate distributorship to a mlm scheme - the transformation is not complete because there are not DVD detailing who to "make it in Tupperware". But once they appear, Tupperware will be a full fledged Amway scam - selling the dreams of income earnings instead of selling product consumers want.

Full post as published by Misleading Advertising Law on November 25, 2008 (boomark / email).