Kevin Thompson (MLM attorney, managing partner at Thompson Burden) reports from the ANMP conference and argues the network marketing industry must adopt serious self-regulation with meaningful enforcement. He contrasts empty rules with penalties in other industries (NASCAR, NFL) and highlights a DSA commitment—public yearly reporting of complaints and corrective actions—calling it a positive step if enforced rigorously.
Chapters
Hi, everyone. Kevin Thompson here, MLM attorney, managing partner at Thompson Burden. And I've got some interesting news for you. First of all, I was at the ANMP conference a couple days ago. That's the association of Network Marketing Professionals. If you haven't been, it's a phenomenal event. There was over 40 plus speakers, great content, really nice audience, and you get to connect with people on a personal level and learn a lot. And as I'm meeting with different people from all kinds of different companies, everybody wants to elevate the profession, everybody wants to lift up the industry and improve our reputation, but nobody knows how to do it. And I'm not pretending to have all the answers, but I've seen a lot of rhetoric over the past several years and a good friend of mine, Donna Johnson, I'm going to steal this analogy from her. It's a really, really good way of communicating this point. Basically, we're the circus clowns up front, entertaining people, while behind stage there's really crazy things happening. There are people out there talking about ethics that live the values that operate their businesses with integrity, like Donna Johnson, and they're communicating these values. But behind the scenes, there's some crazy things happening. So during my talk, one of the items that I talked about in order to improve the industry, item number one was to get more serious about self regulation. Right? Self regulation is much more preferable than government regulation, without a doubt. But self regulation without regulation is completely pointless. It's meaningless. What's the use of having rules if you don't actually enforce those rules? That was the point of the talk. Now, some good examples of associations out there or leagues that have rules and really have some serious penalties when you violate those rules. Troy Dooley gave me the example of nascar. So, for example, if you poke little holes in the tire, apparently your tire leaks over the course of a race and it can handle better around curves. That's cheating. Somebody got fined a quarter million dollars in that sort of scenario. And they were taken, points were removed, which impacted their ability to do well. I have no idea how NASCAR works, but apparently it was a really big penalty. Tom Brady Deflategate. The NFL could not conclusively prove that he had knowledge about these balls being deflated, but they still put them on the bench for four games. They sent a very clear signal. If you flirt on the edge when it comes to ethics, you're going to pay a price. And that's more than a slap on the wrist. That's going to really impact their ability to make the playoffs. Next year there's a good chance they lose those four games, their season could be ruined. So rules without penalties are meaningless. It reminds me of the quote in the Bible, spare the rods for the child. And the point is there needs to be some sort of mechanism for discipline. I'm very encouraged with what I learned recently. Joe Mariano, president of the dsa, recently wrote an article in Direct Selling News. I provide that link in my website and he hints at in the future they're going to get more serious about enforcing the code. Now he spends a lot of time talking about how great the current code is and how the application process is rigorous. So where his point is, only good companies get through that application process and there are minimal problems later. I disagree, but that's sort of what he's saying in the article he writes, I nevertheless seized the moment during last month's self Regulatory panel to commit DSA to greater transparency around code enforcement actions. I'm going to repeat that, commit the DSA to greater transparency about code enforcement actions. Effective this year, we will undertake new yearly public reporting of complaints received by the independent code administrator as well as the corrective actions taken. So that's a step in the right direction. During my talk, when I was talking about self regulation, I asked the audience to raise their hands if they have heard of an industry wide code of ethics. Everybody raised their hands. Everybody. And then I said, okay, keep your hands up. If you have heard of a single penalty associated with a violation, every single person put their hand down with the exception of one person. And I'm convinced he thought he was going to win a prize or something. So there's one person, complete stranger in the corner. Everybody else took down their hands. Keep in mind, we were in a room of very seasoned professionals, networkers, company owners. Nobody had their hands up with the exception of that one guy. That's a problem. Imagine the speed limit is 70, the people are going 90 miles per hour, 100 miles per hour and there are no speed limits. I'm sorry, speeding tickets, there are no tickets. So if you're an owner trying to compete with people and you're trying to be legal, everybody else is blowing by you, you've got a very difficult decision to make. The decision is, well, if I'm legal, I'm not as competitive as everybody else and I might go out of business. So maybe I should push the envelope, maybe I should flirt on this edge because everybody else is doing it and there are no consequences. So in the absence of regulation, integrity and trust erodes over time. Right now there's a lot more chaos in the network marketing marketplace than people want to acknowledge. This step by the DSA is a phenomenal measure to improve the space, assuming that they're going to be really serious. Like the NFL. Great example. They put the best quarterback in the league. One of the best. I'm a Peyton Manning fan. I'm biased. But they put one of the best on the bench. That sends a very serious signal. The DSA has to be willing to put some of its star companies on the bench in order for this measure to be really meaningful. So that's the update. It's pretty significant. I firmly believe the industry's best days are ahead of it. We've got to get serious about self regulation to get there. Take care.
