The FTC is taking action against another MLM for putting a greater focus on recruiting new distributors instead of growing the customer base.
In a complaint filed in Federal Court, the FTC alleges that Success By Health and its executives James “Jay” Dwight Noland, Jr., Lina Noland, Scott A. Harris, and Thomas G. Sacca an illegal pyramid scheme. The FTC claims that less than 2 percent of participating consumers received more money from the defendants than they paid to them, and that most of these people made less than $250 per month.
Not only was the company putting the focus on recruiting, they were actively competing against their distributors by selling products direct to consumers for the wholesale price which effectively prevented distributors from being able to create a retail market.
The days of recruiting distributors who recruit more distributors with zero focus on customers must stop. As we’ve said before – companies MUST have a thriving customer acquisition program.
If companies aren’t being aggressive about helping their distributors attract more customers, they’re opening themselves up to a fight with the FTC. And most of the time, they’re going to win. Even if there’s not a lot of evidence to support their allegations.
Very few companies have the resources of an organization like Amway or Herbalife to fight the FDA, FTC or SEC in court. Litigation is too costly. Even when a company like Advocare is attacked who has the financial resources to fight, they choose not to because they know the odds of winning are not in their favor.
If you’re involved in a company that isn’t focused on recruiting customers – let this be a warning. If you don’t change the culture of your company, you can count on a regulator stepping in and doing it for you.