Direct Sales Industry
Decades of experience representing direct sales companies
Capabilities at a glance
- We have represented direct sales companies since the early 1980s and currently serve as lead outside counsel for top direct selling businesses. We know the industry and its maze of regulations inside out.
- Deep involvement in the Direct Selling Association (DSA), with attorneys active in its Lawyer’s Council working on specific taxation, internet and regulatory issues and frequently presenting at the DSA's annual Regulatory Summit.
- Supporting our direct sales clients in regulatory matters, investigations and enforcement actions involving the FTC, FDA and state attorneys general.
- Experience defending top-100 DSA clients and key distributors in class actions and other complex lawsuits involving federal Racketeer Influenced and Corrupt Organizations (RICO) Act claims, Telephone Consumer Protection Act (TCPA) claims, federal and state securities claims, breach of warranty claims and related consumer protection claims.
Steering you through the complex legal issues around direct sales
With Quarles, you can expect the best advice on direct sales law delivered with an emphasis on pragmatism and deep industry knowledge. We will always take the time to understand your specific business objectives and deliver solutions tailored to your needs. Our attorneys help clients better understand the regulatory and competitive environment to maximize your ability to operate within it. We advise direct sales and multilevel marketing companies in state and federal regulatory compliance and securities matters as well as complex commercial litigation disputes. This includes representation in bet-the-company litigation, class actions, regulatory investigations and enforcement actions, and state and local tax and nexus challenges. Our attorneys will help you achieve compliance with the continuously evolving legal and regulatory landscape, while keeping your business success in the forefront. We have an excellent track record of assisting our clients in avoiding distributor disputes and defending against competitors raiding one of your most important assets — your distributor base.
Attorneys with deep direct sales industry knowledge
Our direct sales industry attorneys serve as outside counsel for companies with combined annual sales in the billions, related operations in foreign countries and millions of distributors in interrelated companies throughout the world. We pride ourselves on being able to address the complex legal issues faced by those involved in the direct sales industry, offering particular insight in the nutritional, health and wellness, cosmetics and skincare, consumer goods and jewelry direct selling niches. The acumen of our attorneys in litigation, employment, tax, international, regulatory, intellectual property (IP), internet, product liability, privacy and data protection, health care and business law — combined with years of experience with specific issues confronted in the direct marketing industry — allows us to provide practical and cost-effective counseling.
Experience
Litigation and arbitration
- Representation in bet-the-company litigation and arbitration proceedings.
- Temporary restraining orders/preliminary injunctions to prevent distributor raiding, breach of contract, trade secrets violations and IP infringement
- Litigation/advice regarding “gripe sites,” negative spam campaigns and defamation claims
Compliance reviews
- Distributor compensation plans
- Distributor handbook and compliance policies
- Confidentiality and trade secret provisions regarding upline/downline, income representations/disclosures, recognition programs and product reviews
- Dispute resolution, mandatory arbitration and class action waiver policies
- Business method and promotional tools policies
- Starter kits, promotional materials, website audits, telephone recordings, audiotapes and DVDs for FTC/regulatory compliance
- Audit/compliance review and policy enforcement programs to achieve greater distributor compliance, lower regulatory risk and mitigate audit-related damages
- Trademark and copyright issues regarding distributors’ use of film clips/articles and improper use of trademarks and domain names
- State and local tax and nexus challenges
- Telemarketing, Consumer Fraud & Abuse Prevention Act and policies regarding unsolicited faxes
- TCPA regarding texting, autodialers and recordings
- Policies regarding preserving independent contractor status and limiting potential exposure to liability for acts of distributors
- Distributor termination issues
Internet-related law
- Website distributor policies, including use of template content, trademarks, hyperlinks, banner ads, auctions, domain names and email
- Anti-spamming compliance policies under the CAN-SPAM Act
- State privacy and data security requirements and company privacy and data security policies
- Creating binding online contracts pursuant to E-SIGN law and disclosure/notice requirements relating to material policy changes.
- Trademark infringement, including metatags and search engine pay-per-click links
- Digital Millennium Copyright Act regarding copyright claims and limitations on liability
- Anti-Cybersquatting Act regarding hijacking of trademarks in domain names
- Antitrust issues regarding pricing for online distributor sales
- Auction site policies and enforcement
Successes
- Represented a multilevel marketing company in a bet-the-company case involving one of the most significant enforcement actions taken by the Federal Trade Commission in recent history. Without our firm’s help modifying the FTC’s ex-parte temporary restraining order and removing the appointed receiver, our client’s business would not have survived. We continue to represent the client with its ongoing compliance obligations.
- In our representation of a direct sales company in the nutraceutical and wellness industry, Quarles served as lead counsel in a bet-the-company case involving a Civil Investigative Demand from the FTC, and eventual Federal Court complaint, alleging improper product claims that were not appropriately substantiated. After significant discovery and negotiations, we successfully negotiated a settlement that was a fraction of the initial FTC demand. After creative and collaborative negotiations, we were able to secure a favorable settlement that allowed the company to remain in business. We continue to represent the client with its ongoing business and compliance matters.
