1. Multivitamins are Good for YOU!
2. FTC Targets “Cancer Cures”
3. Vitamin Lawyer Webinars
4. Important Article from MLM Legal Guru
- Blog & News – New Vitamin Lawyer Video
NEW VITAMIN LAWYER VIDEO
“One on One with the Vitamin Lawyer” from Power Pictures Inc.
Trailer: www. youtube. com/watch?v=wWPvzpn0YgA
$14.95 – www. powerpicturesinc. net/store.html
Follow me on Twitter - www. twitter.com/healthfreedomus
Self-Shielding White Paper and Action Item
www. healthfreedomusa. org/?page_id=2752
[Please note: all URLs in this memo are "broken" with spaces inserted after the www. to avoid the memo being treated as "spam" by certain email service providers.]
- Multivitamins are Good for YOU!
Multivitamins may lower heart disease death risk
By Stephen Daniells, 20-Jul-2009
“Long-term regular consumption of a multivitamin may reduce the risk of dying from heart disease by 16 per cent, according to a new study from the US.
Intakes of vitamin E over 215 milligrams per day over the course of ten years were also associated with a 28 per cent reduction in the risk of death from cardiovascular disease, according to findings published in the American Journal of Epidemiology.
The news supports the use of multivitamins and particularly vitamin E, much-maligned and linked to increased risk of ‘all-cause mortality’ in a controversial meta-analysis in the Annals of Internal Medicine in 2004.
The new study, led by Gaia Pocobelli from Fred Hutchinson Cancer Research Center at the University of Washington, also contradicts conclusions from a controversial meta-analysis published originally in the Journal of the American Medical Association (2007, Vol. 297, pp. 842-857). The meta-analysis reported that supplements of vitamins A and E, and beta-carotene may increase mortality risk by up to 16 per cent. On the other hand, vitamin C did not have an effect on mortality.
In terms of other causes of death, Pocobelli report that multivitamins did not decrease the risk of either total mortality, or cancer mortality. On the other hand, vitamins C and E were associated with small decreases in risk of total mortality.
According to a National Institutes of Health (NIH) State-of-the-Science Panel, half of the American population routinely use dietary supplements, with their annual spend estimated at over $20 billion.
Recent results of the National Health and Nutrition Examination Survey showed that 35 per cent of the US adult population regularly consumes one or more types of multivitamin product (Am. J. Epidemiol., 2004, Vol. 160, Pages 339-349).” Continued…
www. nutraingredients. com/content/view/print/253959
2. FTC Targets Cancer Cures: FTC spells out enforcement priorities for deceptive ads
By Lorraine Heller, 23-Jul-2009
“Bogus weight loss products and cancer ‘cures’ have been amongst the top priorities of the US Federal Trade Commission (FTC) in its attempts to police product marketing, the Senate heard yesterday.
“In a testimony before the Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Consumer Protection, Product Safety, and Insurance, FTC described its recent enforcement efforts to address deceptive marketing.
“ ‘Developments in science and technology, as well as in marketing strategies, have led to a proliferation of products and services and a parallel burgeoning of advertising claims about how these products will make us thinner, better looking, and healthier; improve the quality of our lives; make us richer; and even improve our environment,’ said David Vladeck, director of the FTC’s Bureau of Consumer Protection.
“Health and safety claims is an area of “particular importance” to the commission’s current enforcement agenda, said Vladeck.
“ ‘Marketers of dietary supplements and other products have become very bold in the medical benefit claims they are making to sell their goods. Many are going far beyond the basic structure/function claims that are permitted under the Dietary Supplement Health and Education Act,’ he said.
“Over the last year, FTC launched what it called a ‘major law enforcement initiative targeting bogus cancer cures’.”
www. nutraingredients-usa. com/content/view/print/254427
3. Natural Solutions Vital Connection Webinars with The Vitamin Lawyer
Your Ministry, the Law and Alternative Practices
Held July 9, 2009: This webinar is Archived. –
(approximately 2 hours)
A PowerPoint discussion with Counsel Ralph Fucetola JD about advanced health care practices, the ministry and the law. - Includes eBook with forms.
Vital Connection University’s new webinar system is up and running. Here is how you can sign up under the new VC system:
www. healthfreedomusa. org/?page_id=2002
(this page links to VitalConnnectionUniversity.com).
Once at Vital University, at the top right you will find the Student Login.
Once you’re on that screen, take the steps to create a New Student Account.
Once created, login and browse through the Live Upcoming Courses or check out the Recorded Courses and you will find the ones that we have done in the past and the new webinar as well.
Other Webinar Archives [follow instructions above to reach these]
A. CAM Advanced Healthcare Practitioner SOPs
Held: May 6, 2009 – This Webinar is Archived.
(approximately 2 hours)
You can see my short introductory YouTube video at:
B. Bringing New Natural Products to Market
Held: May 10, 2009 – This Webinar is Archived.
(approximately 2 hours)
What does it take to bring a new natural product to market? This webinar will cover the pitfalls and requirements. Especially in the current market, you need to do everything right to have a success… includes a useful eBook with forms.
Sign up through link at: www. healthfreedomusa. org/?page_id=2002 – go to “How to Sign-up”
"Your papers must be in order."
Are your ingredients "grandfathered" under DSHEA?
Have you filed your Structure and Function Claims Notices?
Do you have your SOPs (Standard Operating Procedures)
Is your web site Site Use Statement up-to-date?
Is your Substantiation Notebook ready?
Your papers need to be in order before the FDA inspection!
C. Sustainable IRA
Held: Saturday June 13, 2009 – This Webinar is Archived.
(approximately 2 hours)
Sustainable Retirement Capacity - Protecting the Environment AND Your IRA/401 – At the Same Time! The Foundation Trustees lead you through an interesting slide presentation that will help you make important decisions about where you want to be in the event conditions in the US continue to deteriorate. Free Webinar ($25 donation suggested). With eBook.
Direct IRA link: www. Vitalconnectionuniversity .com/moodle/course/view.php?id=95
Each Webinar includes its own useful eBook of forms and other information that will help you better organize (includes full powerpoint presentation text and resources).
4. Important Article from MLM Legal Guru
Gerald P. Nehra, Esq. is a very well known MLM lawyer. While I don’t usually reproduce whole articles in the VL Update eMemo, this one is a must read for all MLM people, so it is reproduced below.
Ralph Fucetola JD
www .vitaminlawyer .com
http:// vitaminlawyerarchives .blogspot .com
Gerald P. Nehra
Attorney at Law
What follows is from the legal perspective of an attorney who has had
to defend M/L/M companies from regulatory scrutiny and attack. The
creative genius of entrepreneurs is not discussed or highlighted in
the following analysis. The marketing view is missing. The hype and
the fluff and the attention-grabbing bells and whistles are left to be
discussed by authors writing from a marketing perspective. This
article does, however, take into account the internet and e-commerce.
The laws in this area have not kept pace with technology, but
technological advances have not suspended the application of the laws.
When all extraneous twists and turns are scraped away, what is legally
left needs to look something like this, or the M/L/M operation will
not be allowed to continue long term in the United States or Canada.
A. The company brings a product or service to the marketplace that
1. is retailable, and
2. is being retailed, and
3. does not include a right to bring more participants to the
company. A service that contains the right to bring customers to the
company, like a shopping mall, can qualify, but not if it also
contains the right to bring more income opportunity seekers (legally,
“participants”) to the company. Multilevel income opportunities
CANNOT be sold in the United States or Canada.
B. The product or service reaches the end user through efforts of
direct sales representatives (independent contractors), rather than
through traditional retail establishments or other channel of
distribution choices like mail order or telemarketing. This channel
definition is driven, not by any e-commerce techniques, but rather by
the payment of money to an independent contractor for producing a
result. Another characteristic of this channel is a lack of employees
(involved in selling) to whom W-2s are issued but rather the presence
of independent contractors to whom 1099s are issued.
C. The company’s compensation plan
1. is designed to reward representatives for the sales of the
product or service they are involved in, and
2. includes an incentive and reward for the representative to be the
“new representative finder” (legally, another “participant”)
in the form of payment to a representative who introduces an
additional representative to the company, BASED ON the sales volume of
the second representative.
It is the presence of the design plan feature described in C2 above
that subjects a single-level direct selling company to multilevel laws
and regulations, whether or not the company chooses to use the term
“multilevel” in its literature. Not all companies or distributors
agree with this definition. I respect differing views. At the time of
this writing, I am unaware of any regulatory agency in the United
States or Canada who defines an M/L/M company substantially
differently from what I have just stated. It is the compensation
feature described in C2 above that brings the company under the
microscope of regulatory scrutiny. A “participant” in the legal
sense has the right to introduce another “participant.” If your
rights stop at finding, introducing, locating, or selling to
“customers,” you are not a “participant” in the legal sense,
rather you are operating in the C1 portion of this analysis. Whether
or not there are “participants” is very critical. The fact that
you may receive a 1099 on the rewards of your efforts does not make
you a “participant,” unless you also have the right to introduce
others who also have the same 1099 potential. No amount of e-commerce
manipulation or affiliate program wording can change this. Only
legislatures can change laws, and they are notoriously slow to act.
Personal consumption by representatives is much discussed. A lot of
it is good for the company’s bottom line, but too much of it is bad.
How much is too much? One hundred percent personal consumption creates
a presumption in the law and in the analysis of the business by
regulators (in my view) that the only persons willing to buy the
products or services are income opportunity seekers, and the amounts
being paid are no more than disguised headhunting fees. Such payments
are pyramidal and illegal.
“What percentage of sales to non-representatives do I need to be
legal?” You do not want to ask the question, and you do not want it
answered for you by government agencies. There are companies with very
high percentages of “personal consumption” by their
representatives that pose no risk of abuses, such as deceptive
recruiting, inventory loading, or the “running out of people”
pyramid risk. Also, an argument can be made that people who become
representatives solely to buy products or services at wholesale,
rather than retail, and who do not also buy for resale and do not
sponsor, are customers, rather than income opportunity seekers. For
the purpose of defending high amounts of personal consumption, an
argument can be made that one does not become a “participant” in
the legal sense until one introduces another participant, since only
then can rewards flow based on the second participant’s sales
volume. If all of the elements of the analysis above are present, the
percentage of personal consumption by representatives should not
matter. If the question is even raised, it usually means A1, A2, or C1
is missing or flawed. But I will not duck the question. My answer is
this: Twenty percent of total sales to non-representatives should be
sufficient to rebut any presumption. Of course, other pyramid tests
would still apply. One reason I say this is because companies with
very high personal consumption percentages have been going strong for
ten years or more and pose no pyramid risk.
A1, A2, or C1 in the above analysis cannot be missing or flawed. C2
alone, without A1, A2, and C1, is deemed an endless chain and an
illegal pyramid. If in the design or in the implementation of an M/L/M
program all that is visible—all that the regulators see, all that is
really happening—is income opportunity seekers who find more income
opportunity seekers who find more income opportunity seekers, etc.
(legally, “participants”), the regulatory end is near, sooner or
later. The regulators, with or without specifically drafted laws,
state their position simply—you run out of people.
So, since retailing is so essential, let’s examine it in more
detail. What does “retailable” mean? It simply means “Will
people buy my product or service?” The question appears almost too
simple, so we need to be more specific about “people.” The
“people” need to be people in a “customer” sense, rather than
in an “income opportunity seeker” sense. There are hundreds of
reasons why people will not buy products or services: They already
have one; the cost is too high; they have no need or desire to own
one; what is being sold is of poor quality; etc. The test here does
not need to find a specific reason. If no one but income opportunity
seekers buys the product or service, the presumption is raised that
the product or service is not retailable, and A1 in the analysis is
flawed. Look at traditional companies by comparison. If no one buys
what they offer for sale, they are out of business. If the M/L/M
company continues in business anyway, regulators presume the company
is selling the right to sponsor yet more people. Federal and state
laws prohibit selling the right to sponsor.
Once the retailability of the product or service is questioned, the
risk of the MLM element of the compensation plan (C2 above) being
attacked as illegal greatly increases. An argument can be made that
people who become representatives solely to buy products or services
at wholesale, rather than retail, and who do not also buy for resale
and do not sponsor or refer, are customers, rather than income
Examining A2 in more detail, it differs from A1 primarily in the
focus placed on retailing by both the company and its distributors. If
the product or service is not retailable, we do not even get this far.
If the product or service is retailable, but little corporate or field
focus is placed on retailing, A2 is flawed, possibly not in the
design, but surely in the implementation. Some things to look for:
Does information exist in paper or electronic form specifically
designed to assist the retailing effort? Does training exist to assist
the field in its retailing efforts? Is retailing discussed in
opportunity meetings or on web pages if the company is primarily
e-commerce driven? Once the lack of actual retailing activity is
identified, the risk of C2 being deemed illegal greatly increases.
C1 and C2 are separated on purpose. It is a critical separation for
legal positioning. The existence of a viable income opportunity,
without the necessity of recruiting more income opportunity seekers,
is absolutely essential. Simply stated, one test for the legality of a
multilevel income opportunity is a single-level analysis. Can money be
made by the income opportunity seeker without sponsoring? The form of
the single-level income opportunity is not as important as the
substance. Traditionally, the representative’s first way to make
money is to keep the difference between what he/she pays for the
product and what is received for the product when he/she resells it.
This “two passages of title” method of distribution has been
replaced to a great extent by the representative being a “customer
finder” and the company performing direct fulfillment. The
e-commerce revolution may totally obsolete the “two passages of
title” method of distribution. Some companies add to the first
profit opportunity an additional profit opportunity in the form of
bonuses, rebates, or commissions. The key to the C1 analysis is that
sponsoring of another “participant” must be optional. There must
be a place in the compensation plan for the non-sponsoring income
opportunity seeker. If the ONLY way an income opportunity seeker can
make money is to bring to the company more income opportunity seekers,
the plan is fatally flawed. It is an endless chain. The argument that
it “really is not” an endless chain, when you carefully examine
the design and read all the fine print, will not hold up if the field
force presents it only as a sponsoring opportunity. The fine print
does not save the day. How a plan is implemented carries much more
weight than how a plan is designed.
Some specific points need to be made about C2. No reward can be paid
to the first representative for the act of introducing the second
representative to the company. Such payments or rewards are called
“headhunting fees” and are barred by law. No charge or required
product purchase can be imposed on the second representative by the
company or the sponsor as an entry fee. (A required purchase of an
at-cost, non-commissionable sales or starter kit is permitted.) Simply
put, neither the company nor the sponsor can profit from the sole act
of recruiting. Profit to the company and profit to the representatives
must come from the sale of products and services to customers, and
only from the sale of products and services to customers.
If, from the start, all of the points made above are addressed in
the initial design and are monitored in the implementation, regulatory
scrutiny is unlikely. When inadequate or no attention has been paid to
A1, A2, and C1, the states with proactive consumer protection agencies
are likely to start an investigation rather quickly. I advocate
correct initial design and company-monitored, correct implementation.
However, some companies getting off on the wrong foot can recover.
Fixing a flawed plan can be as easy as changing language in
corporate literature, or as difficult as rolling out totally new and
substantially restructured products, services, and methods of
compensation, accompanied by massive nationwide retraining. Some
companies have made these transitions, and others have died in the
process. When the alternative is a cease and desist order in a key
state, with more states to follow, hard choices must be made. The
bottom line will be affected. Fickle representatives will jump ship.
Some representatives seek out and work flawed plans for the quick
monetary gain and are prepared to move on to the next one at a
Patching up C1 and C2 is inadequate, without a corporate resolve to
address A1 and A2. It starts with the company’s product or service.
Long before M/L/M, around the turn of the century, someone said,
“Build a better mousetrap, and the world will beat a path to your
door.” The “making legitimate,” or “legalizing,” of an M/L/M
plan under regulatory scrutiny can only be accomplished by going to
the core. The core is the product or service being brought to the
general public marketplace by the company, and, of course, how it is
brought to the marketplace. The core is not the bells and whistles of
the compensation plan.
If a flawed M/L/M plan is under attack, it must be taken most
seriously. State and federal regulators are too savvy to accept
wordsmithing patches without substantive changes to the way business
is done. Often, distributor “leaders” want the simple formula of
“get two who get two, et cetera, and cash those commission
checks.” If, in the analysis above, A1, A2, and C1 are flawed,
either in the design or the implementation, significant changes to the
way business is done must be made. If few or no one will buy the
company’s products or services, except to play the game, then the
M/L/M plan will be attacked as an endless chain money game. The state
or federal agencies will eventually hound the company out of business.
What is often required to close or settle an investigation is a
corporate marketing shift to a retailing focus, followed by field
retraining. Corporate monitoring and verification that the changes are
being implemented in the field are often required.
Since retailing is the legal answer to M/L/M longevity, finding the
right products or services is critically important. But I am
digressing from the legal perspective. To wrap up, I have looked for
other paths through the jungle of laws and regulations regarding
M/L/M. E-commerce increases the many variations of selling, but does
not bring with it exemptions from anti-pyramid statutes. If another
path exists that does not include or require these legal ABCs, I have
not found it.
Gerald P. Nehra is a private practice Attorney at Law. He is one of
only a few attorneys nationwide whose practice is devoted exclusively
to direct selling and multilevel marketing legal issues. He began his
legal career in 1970, and from 1982 to 1991 he was the Director of the
Amway Corporation Legal Division. He can be reached at Nehra & Waak,
Attorneys at Law, 1710 Beach Street, Muskegon, Michigan 49441,
231-755-3800. His e-mail address is GNehra@mlmatty.com
. You are invited to visit his web site at www.mlmatty.com
. Permission to reproduce, with this attribution included, is