“We’re excited to share our hard-won perspectives and everything we’ve learned in our journey about how to navigate adversity no matter where you are in life,” Amber said. “It will help you find joy in the journey, no matter what roadblocks may come your way, and gain valuable insights with every episode.”   

The podcast will be available across platforms, including iTunes, Spotify, YouTube, Pandora and Soundcloud. 

The post Neora Announces New “Built to Win” Podcast  first appeared on Direct Selling News.

On DSN’s 20th anniversary, we asked industry leaders and legends to share how past evolutions and current opportunities are shaping the future of the industry.

In 2004, Stuart Johnson, now CEO of Direct Selling Partners, Direct Selling News (DSN) and NOW Tech, held a clear vision: to create a monthly publication that offered timely and useful information to direct selling executives. Today, that vision has expanded beyond a print publication to include podcasts, workshops, executive forums and informative in-person events featuring the biggest names in the industry. The format and appearance of the magazine has changed throughout the years, but the original foundation of Johnson’s vision remains unchanged.

As we celebrate 20 years of innovations and insights, we take a look back on a few of DSN’s most important milestones. But even before DSN’s debut in 2004, Founder and CEO Stuart Johnson had an illustrious career influencing the channel. He founded VideoDirect in 1987, which ultimately became VideoPlus and then SUCCESS Partners. He launched SUCCESS Partners University, an education conference for direct selling corporate executives in 2002.

DSN, now in its twentieth year of publication, continues to be the go-to resource for well-researched global industry news, expert insights and interviews with the founders and executive leaders behind the channel’s legacy companies and rising stars.

Deborah K. Heisz, now Neora Co-CEO, and John Fleming, a DSN Legend and former Avon executive, were two of the original staff members tasked with assembling the publication’s flagship print issues.

“At the time, there was no real periodical resource for legitimate news and information for people who were leading and operating direct selling companies,” Heisz said. “People were hungry for a trade journal they could rely on, and we received feedback from dozens—if not hundreds—of executives and owners across the industry letting us know we had truly filled a need.”

From a simple eight-page newsletter to the robust, global magazine it is today, DSN remains committed to supporting, informing, connecting and challenging direct selling executives across the US and around the world.

“I planned to stay for two to three years, but I remained Publisher and Editor in Chief for nine,” Fleming said. “We started by building something relevant and, in many ways, it has become far more relevant than we ever envisioned.”

Twenty Years of Industry-Changing Trends

The past two decades have been host to some of the most dramatic shifts in the channel, including the proliferation of the internet; the broad adoption of mobile devices; and pandemic-induced social distancing that forever changed the way shoppers buy products and interact with brands. With each paradigm shift, the direct selling industry learned to evolve and adapt.

We asked these executives: In the last 20 years, what changes have had the greatest impact on the industry?

“The vast majority of companies started in the industry by sharing products at home parties. Now, we’re sharing the opportunity virtually and across the globe without concern for physical barriers. Digital platforms forced all of us to adjust, while opening up a world of opportunity.”—Mark Pentecost / It Works! Founder and Chairman

“The operating landscape has permanently changed. Millennials want their own gig, but the average direct-to-consumer venture lacks the ability to scale up the way a direct selling company can with sales organizations.”—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“Twenty years ago, signups and applications required a stack of paper. Today, it’s all done digitally. Technology has enabled much more efficient point-of-sale transactions and created the ability to connect and communicate with more people.”—John Addison / Addison Leadership Group; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“The digital revolution of the early 2000s felt, at the time, like a once-in-a-lifetime revolution, but it proved to be just the beginning of an avalanche of technology and business models that would profoundly change the world around us. Through all of these changes–the rise of social media, gig platforms and AI, and the challenges of the pandemic—we have demonstrated that, as a channel, we can adapt and evolve quickly.—John Parker / Amway Chief Sales Officer

“Technology has been the biggest gamechanger for us. I believe you have to have a robust strategy in both automation and face-to-face interactions for success in today’s marketplace. It is a delicate balance. Simplicity and speed can be the difference between success and failure.”—Kevin Guest / USANA Executive Chairman

The Next 20 Years

Lessons from the past 20 years have illustrated that change is not only inevitable; it is a critical part of healthy evolution. It was by welcoming social media, ecommerce and a digital-first footprint that the industry was prepared to not only survive but thrive during the pandemic. And as industry leaders look to the horizon, it will be that same bold approach and nimble, open mindset that will prepare the next generation of direct sellers for success.

We asked these executives: What actions should leaders be taking now to prepare for the future?

“We need to remember what got us here. We have always been an industry that focuses on building people, and then those people go on to build our business. We can ensure our future success by remembering that the most valuable asset any direct selling company has is our loyal, hardworking distributor field!—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“As technology continues to create opportunities and disruptions, I believe the future of direct selling will have to be centered around community and the social dynamic in our businesses. Great products, compelling income opportunities, competitive customer and representative experiences will continue to be basic requirements, but the community and social experiences we offer can be real differentiators.—John Parker / Amway Chief Sales Officer

“We empower women and others to work a meaningful business in pockets of their day. That’s the best part of direct selling. That’s how we win. We must continue to create and emphasize this opportunity—the side hustle is always in style.—Sarah Shadonix / Scout & Cellar Founder and CEO

“Leaders in the channel should plan for growth. Those who stay current by investing in the technologies of today and tomorrow—including new ways to purchase, improve speed to customer and product value—will thrive.—Joni Rogers-Kante / SeneGence Founder and CEO

“Direct selling will continue to thrive where the exchange of value is ongoing and supportive—like in following a nutrition or fitness plan—because of the importance of accountability to achieve success, but we need to acknowledge that affiliate marketing will replace network marketing where the relationship is purely transactional.—Carl Daikeler / BODi CEO

“Personalization and integration of AI in customer service are trends that we find exciting and that we are integrating into our strategy. Direct selling is also very unique; we never work solely online or offline. The future is hybrid, and we are relying on hybrid solutions in our strategy and development to be active pioneers in our industry.—Rolf Sorg / PM-International Founder and CEO

Creating a Lasting Impact

DSN has always strived to stay on the cutting edge of direct selling trends, news and thought leadership through its educational initiatives and events. We asked these executives: How has DSN’s coverage and perspective impacted your businesses over the past two decades?

“DSN has challenged the way I think about our business and the future of our channel. It helps me sift through the hype and understand the real innovations and opportunities that will shape our future. I am so grateful for the connections and insights that DSN has brought to me and our industry.”—John Parker / Amway Chief Sales Officer

“What DSN provides is something critical for the industry: a collegial way to share best practices with one another. One of the great things about the direct selling industry is people’s willingness to share both their successes and failures. DSN gives executives a way to learn and grow their businesses.—John Addison / Addison Leadership Group CEO; Board Member for Primerica, LegalShield; Senior Advisor to Utility Warehouse

“DSN is a powerful source of knowledge, allowing companies to learn from each other and grow. DSN has always offered great insights and innovative ideas. When there can be criticism of our industry, it’s important to have a platform like DSN to speak of the positive impact we’re having around the world.—Mark Pentecost / It Works! Founder and Chairman

“DSN is an important forum for keeping abreast to fast changing forces and how others are approaching and adapting to remain vital and resilient.—Rick Goings / DSN Legend, Chairman Emeritus and former CEO of Tupperware Brands

“The DSN articles and DSU events have been an amazing asset to the corporate leaders of this channel. They both create opportunities to gain valuable information, ideas and strategies, and they give guidance during changing and challenging times.—Rudy Revak / DSN Legend, Founder of Symmetry and Xyngular

“DSN continues to be an important voice and resource for steering the direction of this method of sales and marketing. It’s easy for institutions and regulators to lose sight of the individuals who legitimately use direct selling as their livelihood. DSN helps us all remember who is most important in this industry, and it’s not the company—it’s the distributors and customers.—Carl Daikeler / BODi CEO

“When DSN started, I remember thinking: ‘Finally! One place to get timely, reliable and insightful information on other direct sellers.’ Before DSN, people had to constantly scan multiple sources. It was very easy to miss company announcements and releases because so many direct sellers were private or just starting out.—David Holl / Mary Kay Chairman and former CEO

“DSN is my ‘go-to manual’ when I have questions; seek insight; look for surveys; or simply look for inspiration when I need it. I never throw away a publication, as I know I’ll need to refer to it one way or another. It helps me stay informed and current with what is going on in our channel.”—Joni Rogers-Kante / SeneGence Founder and CEO

“The community gains so much strength when we all work together, and DSN makes that happen. They are invaluable to the ongoing growth and professionalism of this industry, and I am so grateful for their work.”—Michele Gay / LimeLife by Alcone
Co-Founder & Chairwoman

“The coverage of the direct selling landscape in DSN is like no other, providing a clear and nuanced view into an industry that thrives on personal connections and innovative strategies. The articles are a testament to the precise research and commitment to detail that the team embodies, making Direct Selling News an invaluable resource for anyone involved in or interested in the dynamic world of direct sales. It’s journalism that not only informs but enriches and compliments the conversation around this unique sector of commerce.—Rolf Sorg / PM-International Founder & CEO

Building a Legacy Meant to Last

Reflecting on the past 20 years, the DSN team continues to build and plan for an even brighter future with more events, global coverage, expanding platforms and an unflinching grasp of Johnson’s original vision. The next 20 years will expand on that relevancy and commitment, providing more insights, developing broader resources and presenting more opportunities to support the executives working diligently to strengthen and scale the one-of-a-kind entrepreneurial possibilities found within the direct selling channel. 

From the January/February 2024 issue of Direct Selling News magazine.

The post Cheers to 20! first appeared on Direct Selling News.

But how do you turn all of that learning into action? The key is to pin down a handful of revelations that rose to the top, and then do something with them! In an effort to help us all take action, whether you were there or not, here are the next steps I would encourage any executive to take, inspired by Fall DSU 2023. 

1 / Get Serious About the Hispanic Market

The most blatantly clear takeaway from DSU was a lot of companies growing in the US have one thing in common: a commitment to the Hispanic market. This was a key point in about four different presentations. Whether you decide to target the Hispanic market or not, every executive needs to be intentional about how you’re thinking about this market, both globally and especially in the US.

2 / Simplify until It Hurts

John Alcala, CEO of It Works!, reminded us of just how much distributors have on their plates…and that’s before we add all of our stuff (promotions, incentives, announcements, launches…) to the mix! We all talk about simplifying our business, but do we really do it? To experience the kind of simplicity that actually prompts growth and duplication, you’ve got to shed some of the secondary “stuff” that only gets in the way for the average distributor. Go find it and do something about it.

3 / Experiment, Learn and Adapt

pawTree Founder and CEO Roger Morgan walked us through a few scenarios where the company identified a problem; came up with a possible solution; and launched quickly. Some worked well; some didn’t; and some only worked within very specific circumstances, but not others. The takeaways from his specific examples were helpful, but the biggest takeaway is this: am I tracking everything I do well enough to know if it works and why? And then do I keep iterating to see the improvement?

4 / Compare Your Business to Neora

A huge perk of DSU was hearing from Founder and CEO Jeff Olson and Co-CEO Deborah K. Heisz from Neora about their journey in their case against the FTC. The work they’ve done is so vital for every single one of us—both in terms of validating what we do and also shedding light on how we should do it. But in Stuart Johnson’s words, “If you’re still doing things the wrong way, this is not a win for you!” Deb shared some of the elements of Neora’s business (like 80 percent of those who buy from them are Customers and receive no commission) that strengthened their case. It’s in no way the hard-and-fast rule that must be followed, but if you need a standard to compare yourself against, it sounds like we just got a new one.

5 / Start Using AI (whether you want to or not!)

I’ll admit I’ve been slow to jump on the AI bandwagon. It can feel a bit overwhelming to understand. And it can feel like “just one more thing,” when I’ve already got enough “things” in my life. But after listening to Blake Mallen and Brandon White talk about how they’re putting AI to use right now, I realized my excuses hold little weight compared to the unbelievable benefits that can come from incorporating AI into how I work and live. Rather than figure it all out, I’m simply dedicating 15 minutes a day to using AI in some form or fashion. It’s the only way I’ll learn it and appreciate it. Maybe you should, too.

6 / Success Is in the Segmentation

No single speaker focused on segmentation as a topic, but many alluded to it. Bridgehead Collective’s Founder and CEO Heather Chastain’s generational research certainly shines a bright light on the need for us to segment what we do. The panel on affiliate programs (and how different each program is) certainly showcases how companies are trying to segment the opportunity in new ways. We even learned of the differences among segments within the Hispanic market. We can all do a better job of segmentation. Whatever is holding you back—technology, resources, know-how, WHATEVER!—let’s make 2024 the year we do something about it.

7 / What We Do Still Matters

Vivian Mokome, Founder and CEO of Vivian Mokome Projects, shared a heartfelt reminder that direct selling changes lives…and, in her estimation, can change continents! She sees direct selling as a prominent force for change in Africa. We must evolve as a channel and respond to the market in terms of what it wants and how it wants it. But we cannot lose sight of the actual life changes that have occurred and continue to occur, no matter how tempted we may be to downplay it in the midst of so many changes. Remind yourself of the greater good your company pursues and provides regularly. There’s no other fuel like it.

Were there more takeaways at DSU? You bet!
This is just a starting place. If you were there, think back to the points above in context of your own experience and determine what makes sense for your company. If you weren’t there, this list can still prompt extremely helpful conversations for your team. And bring them to DSU 2024! DSN

Note from the Editorial Staff: We’re excited to include these insights from industry expert Brett Duncan. Look for more content from Brett in the coming months on the pages of DSN.

Brett Duncan specializes in helping direct selling companies evolve into modern social selling models while still maintaining the culture and essence of who they are and what makes them different. He is Co-Founder and Managing Partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps.

From the December 2023 issue of Direct Selling News magazine.

The post 7 Top Takeaways for Executives from DSU Fall 2023 first appeared on Direct Selling News.

In a ruling that will surely be referred to as the new legal precedent, Neora has emerged victorious from its lengthy battle with the Federal Trade Commission (FTC).

After seven years of investigation, four years of litigation and three years of negotiations, during which the FTC insisted on a nearly complete erasure of the company’s multilevel marketing structure, the court has rejected all of the FTC’s claims against Neora.

“This is the first time that a direct selling company has ever defeated the FTC’s pyramid scheme claims in a court trial.”

–Ed Burbach, Chair of Foley & Lardner’s State Attorneys General Practice

“The FTC had a pre-conceived notion of who Neora was, and despite undisputed data proving they were wrong, they decided to proceed with an unfounded narrative,” said Deborah Heisz, Neora Co-CEO. “Their entire case revolved around one thing: their opinion that paying multiple levels of people commission on a product sale to a customer is paying for recruiting and not for product sales. That is simply not true and not the law.”

The New Precedent

For more than four decades, the FTC has adopted the Koscot Test, which identifies pyramid schemes as those who reward recruiting alone by paying commissions unrelated to the sale of a product to ultimate users. But the laws surrounding direct selling can be vague and the FTC leaned into this during the trial, with their expert witness stating under oath that “there is no test, mathematical or otherwise” to apply to determine an “overemphasis” on recruiting in direct selling.

With this lack of clarity, even direct selling companies who design their infrastructure to prioritize product sales, like Neora did from the very beginning, are not immune from FTC scrutiny.

“Neora’s resounding victory against the FTC is an important, preliminary win for the industry that rejects many of the FTC’s theories for attacking legitimate direct selling companies.”

–Katrina Eash, Partner at the Winston and Strawn Law Firm

“Direct sellers have been operating under a shroud of uncertainty for decades, wondering if they were going to be the next target of the FTC’s ever-changing interpretation of what it means to be a pyramid scheme under Koscot and the rules governing improper claims,” said Katrina Eash, Partner at the Winston and Strawn Law Firm. “Neora’s resounding victory against the FTC is an important, preliminary win for the industry that rejects many of the FTC’s theories for attacking legitimate direct selling companies. It’s unclear what the FTC will do next, whether the FTC may choose other jurisdictions it deems more favorable for future suits, or whether the FTC will continue to experiment with other weapons in its arsenal, such as its rule making authority. But one thing is for certain, Neora fought the battle for direct sellers everywhere, proving that when you build an ethical company and you’re willing to give everything you’ve got to defend that company and its distributors, you can do direct selling right.“

Just as the Koscot test and Amway’s win against the FTC more than 40 years ago shaped the legal landscape for the direct selling industry, so too will Neora’s hard-fought win determine how the FTC can legally pursue companies in the future.

“This is the first time that a direct selling company has ever defeated the FTC’s pyramid scheme claims in a court trial,” said Ed Burbach, Chair of Foley & Lardner’s State Attorneys General Practice and Lead Counsel for the trial. “It is also the first significant victory of its kind since Amway’s 1979 administrative law defeat of the FTC.”

The Future of the Industry in the Balance

The words “no evidence” consistently appeared in response to the FTC’s allegations, but the FTC’s bottom line during the trial was this: Any distributor who purchases product but does not earn commission is being harmed. What’s more, in the FTC’s eyes, those product purchases were considered a business expense, or net loss, regardless of whether the individual behaved as a customer. But this assertion does not take into account the number of reasons people choose to sign on as a distributor, like product discounts or early access to sales.

“We really had no choice but to fight.”

–Jeff Olson, Neora Founder and CEO

To support its claim, the FTC called on an expert behavioral economist who stated that Brand Partner purchases could never be considered ultimate user sales. The court fully rejected the testimony, saying it consisted of “rigid theoretical assumptions” that were not “borne out in reality” and stated that “it cannot be simply assumed that the 70 percent of Neora Brand Partners who never made a sale or earned a commission are disappointed victims of an illegal pyramid scheme simply because they never made a sale, recruited another Brand Partner, or earned a commission.”

“The fact that the vast majority of Neora’s product sales are to satisfy genuine consumer demand, and not as part of a business opportunity, fatally undermined the FTC’s pyramid scheme claim,” said Maureen Ohlhausen, Chair of the Global Antitrust & Competition practice for Baker & Botts law firm, and a former FTC Commissioner who advised Neora during mediation discussions with the FTC. “The court looked to the FTC’s own previous guidance about pyramid schemes, which distinguished between purchases made to satisfy personal demand and those that are simply incidental to the business opportunity and recruitment plan. Because 90 percent of Neora’s revenues come from ultimate user sales, the court determined that Neora does not operate like a pyramid scheme because it does not focus on recruiting as opposed to sales and does not depend on the continual recruitment of new members for its continued existence.”

Neora’s executive team now believes the agency’s commitment to these allegations wasn’t just an attempt to topple their company, but rather a way to target the entire channel and maybe even the independent contractor status as a whole.

“We didn’t just protect our employees and Brand Partners; we protected other industries,” said Jeff Olson, Neora Founder and CEO. “We really had no choice but to fight. I have been in direct selling for nearly 40 years, and my goal when we started Neora 12 years ago was to design a business around high-quality products and provide an opportunity to our Brand Partners without any of the ‘gotchas’ that can show up in the direct selling business. And that is exactly what we did. This was a hard-fought victory for our Brand Partners, employees and direct selling overall.”

“Before we made our first sale 12 years ago, we spent a lot of intentional time defining our core values,” said Amber Olson Rourke, Neora Co-Founder and Chief Sales & Marketing Officer. “A company’s core values are words on a paper until life presents you with hard choices. It is in those moments where you prove if you are going to live out your core values at all costs. We never wavered in making this decision to fight because any other decision would mean walking away from our core values, and the Brand Partners who helped build this company.”

Protect through Preparation

How can we protect our company from scrutiny? That question is at the top of direct selling executives’ minds right now. For Neora, a foundation of transparency and what the court described in its ruling as a “rigorous” and “robust” compliance program, as well as “proactive efforts” to prevent misleading representations about potential income or product claims, made a significant difference in the outcome of their trial.

“I am privileged and proud to have been a part of fighting the FTC on behalf of Neora, our Brand Partners and ultimately the direct selling channel, which I love.”

–Deborah Heisz, Neora Co-CEO

But this multiyear battle is a reminder, Neora’s executive team says, that there is no one tried and true template for staying out of the FTC’s crosshairs. Instead, they advise other executives to build with integrity, implement a strong compliance program and develop true product demand.

Then—be prepared to defend it.

“Every commission we have paid was because of the sale of a product, and almost 80 percent of our total revenue comes from non-distributor customers,” Jeff Olson said. “They had that data for two and a half years before we sued them. We were able to do that because we set the company up right from Day One.”

A Future Worth Fighting For

The collateral damage from a fight with the FTC is high, even when it ends in a landslide win. The looming outcome of the case has been a significant distraction that required immense time and financial resources and created a hefty mental and emotional burden for the executive team. But Neora’s customer base has been loyal, helping the company record some of its highest growth years even amid the years-long trial.

The FTC lost this case but, in many ways, it is still getting what it wants. The channel is much more product focused than it was a decade ago, and the quality of those products is increasing.

Recruitment models are no longer the norm and the industry’s signature multilevel model is being remodeled to include the affiliate and customer acquisition approaches. But for all of these changes, Neora’s victory has sent a clear message to the more than 1,000 direct selling companies in the US: direct selling is a legal and protected path to entrepreneurship.

“I am privileged and proud to have been a part of fighting the FTC on behalf of Neora, our Brand Partners and ultimately the direct selling channel, which I love,” Heisz said. “I am not surprised we won and that the courts upheld existing law. We knew from the start that we could win and that this was a fight worth fighting. We operate a good company that follows all of the FTC guidance and case law that pertains to direct selling. It was clear to us that the FTC was using our lawsuit, and others in our space, to attack the industry. I am so glad we had the facts on our side.”

“We are more excited than ever to share the story of Neora and the impact we have made,” Amber Olson said. “We had a historic launch in this industry, and our next chapter will make an even bigger, lasting impact.”

Judgement Summary

The Court confirmed Neora’s business model is legitimate

• 90 percent of total product sales in 2021 went to customers estimated for personal use
• There is a legitimate and substantial customer demand for Neora’s products
• 75-80 percent of sales are made to customers who have no incentives tied to the compensation plan
• Neora’s profits do not hinge on recruitment of new participants

The Court acknowledged the value of being a distributor—even without earning commission

• In light of discounts, Brand Partners may recoup their enrollment cost
• Receiving valuable goods in return for money does not characterize an expense as a loss

The Court deemed Neora’s compliance program effective

• Neora showed evidence of a “rigorous compliance program”
• Neora made “proactive efforts” to stop problematic Brand Partner claims
• There was no evidence of “defects” or “blind spots” in Neora’s compliance program

The post Victory for Neora first appeared on Direct Selling News.

“We are thrilled with the judge’s ruling, which affirms what we have known all along – that Neora is an ethical company,” said Deborah Heisz, Neora’s Co-CEO. “Our brand partners have worked diligently to build their businesses and this ruling is a testament to their hard work and dedication. We are proud to be part of an industry that empowers entrepreneurs – especially women – and creates real opportunities for success.”

Heisz continued, “Throughout this experience the FTC tried to strong-arm us into agreeing to impact the livelihood of tens of thousands of our brand partners. They didn’t want us to pay any commission to anyone other than the person making the sale, preventing us from rewarding our sales leaders in any way. There is no case law, rules or regulations that support the FTC’s demands. We would not acquiesce and instead chose to fight for the rights of our brand partners and became the first and only direct sales company to take this issue all the way through federal court with a favorable ruling.”

A Powerful Precedent

Neora’s executive team believes this government overreach poses a considerable threat to American entrepreneurs, but that this landmark victory will set a powerful precedent for protecting the rights of legitimate direct selling companies, as well as small business owners in other industries.

“When we proactively filed suit against the FTC on November 1, 2019, challenging the overreach of the FTC, we knew we would have a battle on our hands, but we were supremely confident that the facts and data would show the truth,” said Jeff Olson, Neora’s Founder & CEO. “Living out our mission statement of making people better sometimes means taking the road less traveled, making the hard choice to defend what is right at all costs. This isn’t just a win for our industry, it’s a win for American entrepreneurship.”

Olson continued, “Because Neora has always been built on a solid foundation with science-based products that bring true value to the market; a massive non-distributor customer base that represents nearly 80 percent of the company’s total revenue; and a modern ecommerce sales system that removes the needs for brand partners to carry inventory or incur unnecessary extra costs, we were able to take on and win this important fight.”

This multiyear effort has been a tangible illustration of Neora’s commitment to defending its brand partners through integrity, and the company remains dedicated to continuing and expanding its already robust approach to accountability and transparency.

Staying the Course. Growing Forward.

Heisz shared that the vast majority of its field leaders stayed with the company throughout the course of this trial and have even experienced some of their highest growth periods. All the while building an even stronger customer base because of its strong product portfolio. In the wake of a landmark win, she is even more optimistic about the future of Neora.

The post Neora Wins Landmark Case Against FTC first appeared on Direct Selling News.

After a multi-year hiatus, Direct Selling University was back in-person at the Omni Hotel in Frisco, Texas, infused with more energy and excitement than ever before. The educational and networking opportunity, which has been held virtually during the pandemic, offered experience-based, high-impact insight into everything from improving communication and onboarding practices to the importance of sustainability and diversity.

“Being back in person for the first time in three years was incredibly energizing,” said Shelley Rojas, Publisher and Chief Brand Officer for Direct Selling News. “The human connectivity and interaction reuniting with our in-person attendees was inspiring and a lot of fun.”

Headlining the event was Jason Dorsey, author, speaker, researcher and President of The Center for Generational Kinetics, who shared an extensive data-backed look at the generational trends in consumer purchasing, recruitment, communication and engagement. His keynote address inspired an enthusiastic conversation among attendees about how companies can leverage their culture, technology, digital footprint, messaging tactics and customer service strategies to successfully reach even more people.

“It’s always important to have outside, expert perspectives to help everyone learn, grow, stretch and evolve individually and as a channel,” Rojas said. “Jason’s insights and research on generational trends are fascinating.”

Technology was by far the most discussed category among the generational divides, with Dorsey highlighting how each age group interacts with online platforms in unique ways. By honoring every generational segment within the industry, from Gen Z to Baby Boomers, and acknowledging their separate needs and preferences, Dorsey illustrated how the channel has the opportunity to become not only more relevant, but more effective as well.

“Direct selling has and will always be a people business,” Rojas said. “The more companies focus on how to understand and embrace people from every generation for their strengths and communication styles combined with diversity, equity and inclusion efforts in their decision making and culture building, we believe significant shifts and evolution can happen.”

Edify and Inform

This year’s lineup featured more than 30 speakers from top performing direct selling brands, rising stars within the industry, marketing experts and innovators, with thought leaders and top executives from companies around the world gathered to network, learn and share insights throughout the two-day event.

“At DSN, we strive to edify, inform and educate the channel and the executives that lead it,” said Stuart Johnson, Direct Selling News Founder and CEO. “Direct Selling University serves as a strong foundation for that goal by bringing together some of the channel’s most prominent executives, champions and thought leaders. We create an open, transparent environment that’s designed to foster the sharing of ideas and best practices for the betterment of direct selling as a whole.”

Carrying that mission beyond the event, Direct Selling News also shared its new opportunities for connection, through the DSN VIP Community, a fully customizable text messaging platform that sends news alerts based on user preferences, and the DSN Membership Program, which provides exclusive training and educational opportunities to keep corporate staff members one step ahead with the most important trends and breaking news.

“We’re in the midst of a strategic renaissance here at Direct Selling News and are eagerly looking for ways to share practical solutions to common challenges with the executives who are leading the future of this channel,” Rojas said.

Jason Dorsey, Author, Speaker and President of The Center for Generational Kinetics, brought decades’ worth of data to the stage, sharing the generational angles that no one is talking about and how paying attention to the differences in these segments can help companies future-proof their businesses.

Stuart Johnson, CEO, Direct Selling News, Direct Selling Partners & NOW Technologies, pointed out how the pandemic accelerated trends that were already in motion within the industry and how the channel can use sampling and referrals to capitalize on that customer-centric momentum.

Rolf Sorg, Founder & CEO, PM-International, illustrated how he used solution-oriented thinking to find opportunity within the challenges of the past year to exceed $2 billion in sales.

Sarah Shadonix, Founder & CEO, Scout & Cellar, shared some of her young company’s biggest mistakes and how learning from previous fumbles can help leaders build better businesses.

Brian Underwood, Co-Founder & CEO, Prüvit, and Terry Lacore, Founder & CEO, Lacore Enterprises, in a Q&A panel with Wayne Moorehead, Host of The Direct Approach Podcast, explained how their innovative partnership with Sunbasket is driving consumer engagement while building cost-effective and simple onramps for complicated products that develop loyal customers.

John Parker, West Region President and Chief Sales Officer, Amway; Mark Pentecost, Founder & Chairman, It Works!; and Tarl Robinson, Founder & CEO, Plexus Worldwide, participated in a panel led by Stuart Johnson, and shared why investing in growth amid incredible momentum is critical; offered an inside look at Amway’s approach to sustaining an entrepreneurial culture while leading one of the most well-known brands in America; and how to embrace every phase of a company’s growth.

Ami Perry and Noah Westerlund of NOW Technologies leveraged their data analytics to illustrate how to improve adoption of digital platforms and increase recruitment and retention numbers.

Russ Fletcher, Chief Executive Officer, Xyngular, taught a Personal Development 101 course on stage, sharing how to involve distributors through quick, digital engagements while monitoring perceived value.

Shelley Rojas, Publisher and Chief Brand Officer, Direct Selling News, shared the many free resources available to direct selling executives to connect with breaking news, inspiring stories and education to find answers to everyday leadership challenges through DSN’s VIP community and vast masterclass archives with the DSN Membership Program.

Mike Lohner, President and Chief Financial Officer, Direct Selling Acquisition Corporation, provided an update on the first special purpose acquisition company entirely focused on the direct selling channel and traded on the New York Stock Exchange, including its overwhelmingly positive reception on the market that resulted in raising $230 million.

Kelly Bellerose, Senior Vice President, 4Life, used data from recent studies to explain how vital imagery is for brand communications and why cohesion through consistency, familiarity and repetition can form a brand language that draws in customers in a way that text alone never could.

Debbie Bolton, Co-Founder, Norwex, told the story of how she switched her mindset from a perspective of building a dynasty to creating a legacy, and how leading with the future in mind has helped her company stay relevant.

Daniel Picou, Founder and CEO, Vasayo, discussed lessons learned during international expansion into China, and how to build a sustainable business through steady growth built on customer loyalty and a flexible leadership team.

Kindra Hall, Author, Speaker and Storytelling Expert, explained why the stories we tell ourselves can limit our success, and offered an action plan for transforming the lives of potential superstar leaders by teaching them how to change their own storytelling.

Jesse McKinney, Amanda Moore, Genie Reese, Co-Founders, Red Aspen, interviewed by Heather Chastain, Founder & CEO, Bridgehead Collective and new Strategic Advisor at DSN, shared how they drive engagement through constantly refreshing their product offerings and why sharing all of their marketing assets and training materials publicly has decreased skepticism.

Kevin Guest, Chairman & CEO, USANA, talked about how 30 years of successful business has illustrated the importance of focusing on active customer counts rather than revenue to maintain the overall growth and long-term sustainability of a company.

Sinan Tuna, CEO North America, Farmasi, shared his perspective as a Gen Z leader and how his company has crafted a winning expansion strategy by being nimble, responsive and fast moving.

Wayne Moorehead, Marketing, Brand Strategy & Direct-to-Consumer Industry Expert and Host of The Direct Approach podcast, discussed the changing competitive landscapes direct sellers operate in and how companies can deliver a timely, relevant message across a growing array of customer touchpoints.

Katy Holt-Larsen, President and CEO, Kyäni, talked about how to take the industry to the next level by fighting back against “business as usual” and casting a resilient vision.

Stuart MacMillan, President, MONAT, pointed out the uniqueness of the channel and how an unwavering commitment to acquiring and satisfying customers is the best engine for growth and an effective defense against an ever-changing regulatory environment.

Crayton Webb, Founder & CEO, Sunwest Communications, shared lessons from pop culture about crisis preparedness and how quick, clear communication can prevent damage to a brand’s reputation.

Kirsten Aguilar, Executive Vice President of Global Marketing and SeneCare, SeneGence, shared how they have leveraged a collaboration with distributors who have massive social media followings to promote products in a budget-friendly, viral way.

Paul Adams, Founder & CEO, Adams Resource Group, offered a blueprint for how to create, own and defend your company culture.

Deborah K. Heisz, Co-CEO, Neora, explained the importance of leading rather than reacting in a crisis and shared the key components of their success amid a lengthy battle with the FTC.

Heather Chastain, Founder & CEO, Bridgehead Collective, encouraged leaders to manage field expectations through realistic stories and thoughtful transparency to help them reach their goals.

Kindsey Pentecost, Chief Marketing Officer, It Works!, shared how authenticity, caring for their corporate team as well as the field, being willing to fail, and aligning their culture with their brand accelerated their growth and gave them a competitive advantage.

Don Thompson, President, LegalShield, discussed the challenges of being an established subscription-based service company with aging field leadership and their innovative solutions that honor these legacies while infusing energy into new recruits.

John Addison, Chief Executive Officer, Addison Leadership Group, called people to take charge of their thoughts and attitudes to cultivate a better life and become a person that people want to follow.

From the June 2022 issue of Direct Selling News magazine.

The post Direct Selling University 2022 first appeared on Direct Selling News.

In ten years, the company has generated more than $2 billion in cumulative sales and ranked #12 on Inc. 500’s America’s Fastest-Growing Private companies List, became a Direct Selling Association Top 20 member and was the youngest company to earn the honor of being included in the top 50 of Direct Selling News’ DSN Global 100 list. 

The company’s clean, performance-driven formulas have built a loyal customer base, attracting 2.3 million Preferred Customers and selling more than 40 million products worldwide. The products have also gained spotlight features in national and international media outlets like Allure, Shape and Bazaar.

CEO and Co-Founder Jeff Olson attributes this growth to the company’s three-part model, which includes results-driven products, an instant-gratification compensation model, and a culture of empowerment. 

“We believe in you until you believe in yourself,” Olson said.

Empowering Change for the Better

Neora’s culture has been driven by the desire to create a place where “people can build the business they’ve always wanted,” which for many Brand Partners includes the flexibility to work from wherever they are, cultivate meaningful work relationships and support their life goals through supplemental income.

The company’s mission of “helping people create happier, better lives” extends to making positive impacts on the world outside of Neora as well, through Neora Ripple Foundation, the company’s philanthropic initiative that has raised more than $6 million for charities dedicated to empowering people, including Big Brothers Big Sisters of America and World Vision.

It has also led to the creation of Neora’s sister company Live Happy, which promotes and shares authentic happiness through education, integrity and community awareness, and developed a happiness movement within the company’s culture. Because of this, Co-Founder Jeff Olson and CEO Deborah Heisz have been invited to speak before the United Nations on the International Day of Happiness, and both have been inducted into the Happiness Hall of Fame.

What began as a small startup is now a multibillion-dollar leader in the industry. As the company looks to the next decade, its leaders point to servant leadership as their roadmap to future success, and believe they are perfectly positioned to embrace the future by helping others over the years to come.

The post Neora Celebrates its 10th Anniversary first appeared on Direct Selling News.

Ohlhausen, who is currently a partner at Baker and Botts LLP, brings her expertise in consumer protection and competition to Neora’s fight against the FTC’s overreach.

Prior to joining Baker and Botts LLP, Ohlhausen served as acting FTC chairman from 2017 to 2018 and as a commissioner starting in 2012. Throughout her accomplished career she has testified over a dozen times before Congress and has received numerous awards, including the FTC’s Robert Pitofsky Lifetime Achievement Award.

“Maureen is a strong addition to our robust legal team,” said Deborah Heisz, co-chief executive officer for Neora. “With her FTC background and our strong case, we believe that we can defeat the FTC in its attempt to enact a new retroactive interpretation of how direct selling companies can operate.”

Ohlhausen joins the existing team of prominent lawyers and experts leading Neora’s defense including Ed Burbach, Jay Varon and Craig Florence, all of Foley Lardner LLP, as well as renowned econometrician Walter Vandaele.

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Deborah Heisz, Co-CEO of Neora, noted in the release that the FTC’s acts are in violation of efforts to rein in unelected federal bureaucracies and are a threat to the direct selling industry as a whole. “This is precisely the behavior that the President sought to prohibit in his October 9, 2019 Executive Orders, exhibit 1 and exhibit 2, as well as the Department of Justice in its November 16, 2017 Memorandum prohibiting all federal government agencies from utilizing ‘Guidance’ and other ‘off the book’ regulations to change the law,” says Heisz. “Neora has complied with all laws and the FTC’s most recent 2018 business guidance regarding direct sales business models.”

Founder and CEO Jeff Olson also went on the record about why they are taking the action against the FTC.  “Eight years ago, Neora began as a family-owned business seeking to change lives through our products and opportunities. We are the real deal; in the business of making people better, whether it is a hardworking parent or the budding entrepreneur looking to represent the industry’s leading products. Our Brand Partners work hard, and now it is our job to stand for them and protect the businesses they worked so diligently to develop.”

In the release, it states Neora retained renowned Ankura Senior Managing Director, Dr. Walter Vandaele, to conduct a thorough analysis of its data. Dr. Vandaele is a University of Chicago-trained econometrician who previously served as the Assistant Director for Regulatory Evaluation and Economic Advisor at the FTC’s Bureau of Competition. Neora states that this analysis establishes that 77 percent of commissions paid by Neora in the 2012 to 2017 time period (with approximately 82 percent in 2017) are for sales of product to ultimate end users. This greatly exceeds the law’s “primarily” standard, says Neora.

The company gave further evidence of the demand for Neora’s products. In 2016 and 2017, about 60 percent of Neora’s total sales were to non-business participants called “Preferred Customers”; which is considered high for the industry. The FTC has admitted that it has no material issues or concerns with the calculations or methodologies used by Dr. Vandaele.

“The reality is the lawsuit that we filed doesn’t just protect your business; it’s to protect the businesses of the 20 million Americans that are engaged in direct selling.”

– Deb Heisz, Neora Co-CEO

Nevertheless, despite repeated requests, the FTC has refused to provide Neora with its own alleged analysis. Instead, the FTC, according to Neora, is attempting to announce a new retroactive interpretation of how direct selling companies can operate without considering the actual data.

Olson believes no direct sales company is safe under the FTC’s new arbitrary retroactive standards. “We are an American small business and will take this David and Goliath-like issue and fight for the rights of the men and women who deserve a place in our American economy, and will not be bullied into settling for anything less,” says Olson.

Neora Field Leadership

Both Olson and Heisz addressed their field leaders this morning to discuss today’s developments before the announcement was made. Heisz said the suit was filed because first and foremost they wanted to protect their brand partners’ businesses. “In talking with the FTC they wanted to limit commissions in our businesses to only the person making the sale and the person who recruited the person making sale,” says Heisz. “We’re not willing to make that change, and disrupt the businesses that our brand partners have worked so hard to create. The reality is the lawsuit that we filed doesn’t just protect our business, it is to protect the businesses of the 20 million Americans that are engaged in direct selling.”

Founder and CEO Jeff Olson stated that he was ready for the challenge ahead. “We live in a land of laws, and there’s nobody above the law, even an agency within the government.” Olson also reiterated that he and his team have met with members of congress and feels support for their cause will only grow as a result of the action they are taking against the FTC. “We have the industry behind us, and I believe you’re going to see a lot more support for our cause in the next couple of weeks. This is not only about us, it’s for our industry and it’s the right thing to do.”

You can read Neora’s lawsuit against the FTC here

This story will be updated.

The post Neora Files Suit Challenging FTC’s Improper Attempt to Change Direct Selling Laws first appeared on Direct Selling News.

As direct sellers, we’re intimately familiar with Amazon’s disruption of the retail market, otherwise known as the Amazon effect. We can’t deny that it’s driven millions of consumers online, giving both brick-and-mortar outlets and other e-commerce sites a serious run for their money. By and large, our strategy to compete with Amazon has been to emphasize our personalized service, our preferred customer programs and, for those customers seeking something more, our business opportunities. What we hadn’t banked on, however, was that some of the very distributors who represent our brands would leverage Amazon, eBay and other sites to sell our products at discount, unwittingly placing their own businesses—and the businesses of other independent distributors—in jeopardy.

While this practice isn’t illegal, it’s a clear violation of the independent contractor agreement. What is illegal, however, is credit card fraud, and our industry is by no means exempt from that. Increased awareness of these deceptive practices and their associated red flags are helping direct selling companies reduce the number of incidents, but they remain prevalent enough to keep third-party fraud detection companies in business.

Every organization in every industry faces online security risks today. The risks faced by the direct selling industry, however, are unique due to two factors: one, the independent contractor relationship; and two, our promotion and recognition-oriented cultures, which, unfortunately, can motivate for the wrong reasons as well as the right ones.

Friendly & Unfriendly Fraud

The issues boil down to what John Licari, Chief Operating Officer of Total Life Changes, refers to “friendly fraud” and “unfriendly fraud.” Friendly fraud isn’t necessarily fraud per se, but it involves buying and selling our industry’s products in a manner that doesn’t support long-term, healthy business growth. Unfriendly fraud involves the above-mentioned credit card fraud. A single case may be committed by several individuals who open up an account for the purpose of committing fraud, after which they shut down the account, then open a new one somewhere else and begin the process again.

Friendly fraud, according to Licari, “takes a little longer to materialize. They’re pooling their money, they buy as much product as they can at a reduced cost, and then they’re dumping it on Amazon or eBay or anywhere else they can—and still at a profit because they’re able to obtain it at a discounted rate.” Unfortunately, that’s not the only path friendly fraud can take. “A lot of times with friendly fraud, you’re getting a lot of rank advancements, which could trigger inflated bonuses and commission checks. So now all of a sudden, a $1,000 investment might net $1,500 because you gave everyone time to do the math.” Another common tactic is the creation of fake accounts— for example, a distributor who uses her own credit card to establish multiple accounts for customers who don’t exist.

“One of the biggest mistakes I see people making in this industry is mistaking a flurry of activity for one month as business growth.” —DEBORAH HEISZ , Co-CEO, Neora

Rethinking Product Promotions

Product promotions are one of the common scenarios during which this behavior takes place. Imagine the typical product promotion: You announce it to your distributors, and the promotion continues for a month or more. Our intention is to motivate distributors to challenge themselves—to find a few new customers, sell a bit more product, welcome a few new team members. And many do just that. Sadly, however, a few try to take shortcuts or otherwise game the system.

“If we give people advance notice, if we keep promotions going on long enough, that gives the potential bad guys time to get their ducks in a row and figure out a strategy to manipulate the promotion or the system itself, either through the customer affiliate program or through the standard genealogy,” Licari continues. “They figure out a way to either get product out, or product in and money out, and by the time you figure it out, they’re gone.”

Whether driven by a desire for rank advancement or something more nefarious, an uptick in these unscrupulous practices has brought about a secondary, yet no less important, challenge to our industry. Distributors who approach prospective customers find that they can’t compete when their own products are being sold on Amazon for a significantly lower price. “What’s really happening there is that they’re [distributors] competing against themselves,” says Deborah Heisz, Co-Chief Executive at Neora (formerly Nerium International). While our industry’s reputation for personalized service is a compelling point of difference, “ it doesn’t overcome the online marketplace,” Heisz says. “We really have to control brand pricing online. It’s a huge hurdle, and it’s something a lot of CEOs are talking about right now.”

Cash In Hand Instead Of Product

Last year, The Times of London reported that luxury brands like Burberry had taken to burning their excess stock so as to avoid having their products sold at discount, and to maintain exclusivity and prestige. Burberry disclosed in its 2017 annual report that it had burned $37.8 million of unwanted products that year alone, three times more than in 2014. It may seem extreme, but it’s food for thought. If direct selling companies allow excess inventory to be sold at discount prices, are we unintentionally diminishing the perceived value of our own products?

“If direct selling companies allow excess inventory to be sold at discount prices, are we unintentionally diminishing the perceived value of our own products?”

Neora has just revamped its compensation plan with built-in bonuses to reward those who are actively building and cultivating a customer base. “We’re putting more cash in their hands instead of free product,” Heisz says. “There’s a big problem with giving product versus cash because you’re potentially incentivizing [distributors] to do something that jeopardizes their own business and the company. We want to make sure they’re motivated to talk to people about our products and the business opportunity.”

Short-Term Flash Sales

Burberry disclosed in its
2017 annual report that it had burned
$37.8 million
of unwanted products that year alone,
three times more than in 2014

At Total Life Changes, flash sales have replaced the traditional longer-lead, longer-term product promotions. It’s a change that Licari says has been an effective measure against fraudulent or otherwise questionable purchase activity, and it rewards distributors who are connected to the company and actively engaged in their businesses. Every Friday at 2 p.m. Eastern, TLC delivers a broadcast announcing a flash sale lasting anywhere from 10 to 60 seconds. The company usually decides what will be on sale 15 to 30 minutes before they go on the air. Shorter-term sales, Licari adds, protect against the erosion of brand value.

To illustrate his point, he talks about a regional furniture store where he’s based in Michigan. On nearly any day of the year, the store is running a “50 percent off” sale along with additional incentives like no interest and deferred payment. Any shopper who happens upon the store at a time when a sale isn’t running likely won’t be motivated to make a purchase when she knows another sale is just around the corner. Keeping sales targeted and short based on limited quantity benefits those distributors who are working the business, and it keeps perceived product value high.

Some direct sellers are reducing the dollar amount of product for which distributors may qualify during a promotion, and others have moved toward sampling programs and away from using fullsized product for promotions as a means of curbing fraud.

“For us, it’s about making sure the behavior [distributors] are focused on is not requiring them to stockpile product. That’s bad for them and for us,” Heisz adds. “I think the biggest driver of fraud in our industry is programs that unintentionally incentivize people to spend more and acquire more product than they’re comfortable having. Then they move that product via Amazon or eBay to recoup some of that investment. That’s what I see most often.”

Can We Beat Amazon At Its Own Game?

Amazon will never be able to compete with the kind of personalized service an independent distributor delivers to her customers every day. But is that enough? When it comes right down to it, if a prospective customer can pull out her phone, tap her Amazon app and find your product for less, will she be willing to sacrifice service for a discount? After all, if she doesn’t like the product, Amazon has made it relatively easy for her to return it. In fact, while Amazon may not have much of a customer service presence, consumers don’t seem to be deterred. What this all boils down to, then, is price.

“One of the main complaints we get from distributors is, ‘What are you going to do about Amazon?’” said Danny Lee, President and CEO of 4Life, during a recent Direct Selling Association Companies in Focus event. “What can anybody do about Amazon? The last time I checked, Jeff Bezos isn’t taking my call.” Given that this our reality, “when it comes to our industry, the real question is … how are we adding value, how are we making it easier for our distributors to do business?”

“If we give people advance notice, if we keep promotions going on long enough, that gives the potential bad guys time to get their ducks in a row and figure out a strategy to manipulate the promotion.” — JOHN LICARI, Chief Operating Officer, Total Life Change

At 4Life, the answer has been to price products more competitively. “The company’s goal is to empower distributors not only to offer consumers a superior product but at a price 25 percent lower than Amazon, along with the icing on the cake: personalized service and the option of a business opportunity in the future if the customer is interested.” 4Life initially used a third-party organization to enforce its retail prices on Amazon and now manages tracking and post-market surveillance on its own with a small in-house team.

Recognizing The Behavior That Leads To Success

Rank advancements, bonuses and incentive trips may lead to self-inflicted pressure to order more inventory than a distributor can reasonably sell. With those factors in mind, direct selling companies are examining how they can reward those distributors who are focused on growing and nurturing their customer base versus selling a specific amount of inventory—which can be little more than a means to an end. While they’re well-deserved for hard-working distributors, rank advancements and bonuses are “great, but they’re a one-time thing. It doesn’t build business,” Heisz says. “One of the biggest mistakes I see people making in this industry is mistaking a flurry of activity for one month as business growth. You put in a program and you get all of these sales for one month, but then the next month, you’re right back where you were, if not lower, because everyone has all of the product they need for three months.”

Ensuring that we’re rewarding the behaviors that lead to a sustainable business will support our continued efforts to eliminate misconceptions about the direct selling industry. “I would love to get to the point in this industry where we’ve taken the stigma away because we’ve proven over and over again that this is a great place to start a business at a low cost,” Licari says. “We’re not selling Lamborghinis in bikinis; we’re selling middle America the opportunity to earn an extra $200 to $300 a week by selling our products. There’s a ranking and recognition system, but we’ve chosen to celebrate both sides of the spectrum equally, and that helps us minimize fraud to a certain extent. ‘Ms. Middle America’ who’s probably 35, has a minivan and two kids playing soccer will be celebrated at TLC for making $250 a week just as loudly as someone who made five figures in a week. That’s our dream.”

Stopping Fraud Before It Occurs

A 2017 study conducted by LexisNexis® Risk Solutions determined that for every dollar of fraud, businesses incur an average of $2.66 in losses. Third-party fraud detection companies like Sift, Threat Metrix and iServe help companies of nearly every industry affiliation detect and reduce fraud and spot trends so they can get ahead of would-be offenders. These services employ such technology as Artificial Intelligence to conduct fraud analytics at the pre-gateway state of the transaction before an order is processed. Direct selling companies are not only using these services, but they are also employing dedicated staff to verify the authenticity of orders that are flagged based on various criteria—for example, orders exceeding a particular threshold.

Safety technology aims to strike the balance between making it harder for fraudsters to complete a transaction while maintaining a seamless check-out for its distributors. Kevin Lee, a Trust and Safety architect at Sift, has led various risk, chargeback, spam/scams, and trust and safety organizations at Facebook, Square and Google. He refers to the strategy as “dynamic friction—you want to be able to throw a sledgehammer at a bad guy, take him out, but you cannot apply that same approach to 100 percent of people on the platform. You’re really taking a scalpel approach—targeting a specific subset of that population that is aimed to do bad things.”

Red Flags To Consider

“A very common promotional abuse tactic is promotional funneling—creating fake accounts to redeem additional promotional offers,” Lee continues. “Typically, these fake accounts tend to have identifiable patterns including similar email addresses. From a technology standpoint, we’re looking at user behavior to understand patterns of abuse so that companies can prevent this from happening in real time. With such digital trust and safety tech in play, companies can add friction dynamically so that only suspicious users—in this case suspicious sales reps— have to do things like provide additional credentials.”

Anyone who monitors fraud will soon spot emerging trends and red flags—for example, concentration in a specific geographic location; according to John Licari, Chief Operating Officer of Total Life Changes. “Montreal is a hotbed for fraud right now for us.” Inevitably, as more fraudsters are caught, the number of cases will decrease there, only to pop up in some other location. Subsequently, some zip codes may require dual authentication.

While some factors don’t necessarily mean that fraud has taken place, they do send up red flags nonetheless. For example, a seller with multiple customers all coming from the same device, IP address or street, or who otherwise are in very close proximity.

Fraudsters are a savvy group running a multitrillion-dollar business. “Often times, it may seem like an arms race,” Lee says. “Companies will institute rules or put some kind of monitoring in place, but they’re only putting in those rules because they got burned by someone or some group. And really, the danger there is that fraudsters will go one below the threshold,” or do just enough not to get caught. An additional concern, he adds, is that the institution of rules is likely to introduce friction to your high-performers’ buying experience, when in fact you want to do everything you can to help them sell more. Those hurdles can turn your superstars off or otherwise cause frustration.

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