One of the first things you may find online when researching an MLM company is information about its current or historical status regarding lawsuits filed against it.
At first glance, this may seem like a judge’s final pound on the table for you to keep clear and away from this company. But is that really so? Not necessarily.
Lawsuits introduce a new dimension to your evaluation process of a company.
Let’s first understand the basics of class action lawsuits not in legal terms but in terms of how you approach your evaluation and decision making process regarding the company at hand.
First, anyone can sue anyone, for anything. Therefore, anyone can sue any MLM company for anything. Does it mean it is a justifiable lawsuit? Absolutely not. Does it mean they will win the case? Absolutely not
What you want to consider when the company you’re evaluating has a lawsuit filed against it is what are they being sued for and by whom.
For example, I know people personally who have won lawsuits against companies for different reasons: such as slander and deformation, for wrongful termination, or presenting false and misleading claims.
But I also know of companies that have won lawsuits for pyramiding accusations and violations filed by the FTC or the SEC and the federal government.
For those MLM companies that have managed to prove their legitimacy, winning the case came at a cost.
All of those MLM companies that have survived law suits filed against them are still around today, even if their name was dragged through the mud.
Most notably, Herbalife has a muddy history with lawsuits. In the 2016, it lost a lawsuit charge by the FTC for “Pyramiding” and agreed to restructure its business model and paying $200 million in fine.
Did Herbalife go out of business? No.
Despite the law suit, Herbalife is still a strong company going and blowing.
People are still joining and some are still earning incredible incomes.
I wanted to draw on the Herbalife case to point out that a company that has a lawsuit pending or filed against it, does not necessarily mean that the company will go out of business or is going to get shut down.
Your decision should not entirely hinge on a company’s history record with lawsuits. There is much more to unpack in your evaluation process beyond cases filed against the company you’re evaluating.
That being said, Herbalife’s past lawsuits and claims against them shouldn’t be sufficient justification for anyone to NOT join it if they wanted to. There are other factors that must be considered in the process of making your final decision.
For me personally, the weight of those other factors break the camels back. I will get into more detail what those other factors are in my upcoming posts.
Circling back to a fuller understanding of Lawsuits as it relates to MLM companies, remember lawsuits are a public record, anyone can sue any company for anything.
Therefore, it is paramount that in your research you weight out the nature, the reason, the motivation behind the lawsuits filed against the company you’re considering to join and make your sound decision accordingly.
So today’s question of the day is:
27. Does the company you are evaluating have any litigation filed against it?
Till next time,
Co-authored with Dr Maral “YESS” Yessayan, PhD.
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