Authorized motion by Melaleuca has prompted a YouTube apology video from Hannah Lee Thaler.
Thaler runs the YouTube channel “Hannah Alonzo” which, as of September 2024, boasts 475,000 subscribers.
On or round July 4th, Thaler revealed Melaleuca had despatched her a stop and desist.
I’m assuming this implies Melaleuca despatched the discover round late June.
Sadly Thaler’s content material round receiving the stop and desist has been deleted, so I can’t touch upon specifics of what was stated. Judging from the screenshots above although, that are nonetheless archived in Google search, Thaler wasn’t impressed.
Thaler going public with Melaleuca’s stop and desist (and assumed non-compliance), seems to have prompted Melaleuca to file a lawsuit.
Melaleuca filed swimsuit in opposition to Thaler in Idaho on July ninth, 2024.
Sadly Idaho doesn’t present public entry to case paperwork (I don’t consider you may entry them on-line, solely the docket), so I haven’t seen Melaleuca’s filed criticism.
As per the case docket, Melaleuca served Thaler someday between July ninth and July eleventh. A set of discovery requests was served on Thaler on July 18th.
As of September sixteenth, the case docket displays the result of Melaleuca’s lawsuit is pending.
On September 14th nonetheless, Thaler uploaded a video to the Hannah Alonzo channel titled “Correcting the Document on Melaleuca”.
Within the [1:45] video, Thaler states;
A number of weeks in the past on June twenty fourth I made a video about two unbiased contractor advertising executives from Melaleuca who contacted me asking to sponsor me.
I believed that their request was unusual.
In my video I used to be essential of Melaleuca’s enterprise mannequin, and I instructed that I didn’t take into account Melaleuca to be a professional firm. And I stated that I thought-about them to be a multilevel advertising firm, although they insist they don’t seem to be.
The corporate reached out to me and requested me to appropriate these statements. The corporate additionally requested me to spend a while studying extra about them and I’ve had a number of assembly with them.
I used to be unsuitable in regards to the firm.
And I don’t intend this to be an out and out endorsement of Melaleuca, as a result of I don’t do this. However I’m satisfied that Melaleuca isn’t like several MLM firm that I’ve ever handled.
Clearly I used to be undoubtedly unsuitable to say they don’t seem to be a professional firm.
I spent a while with the corporate’s founder and Government Chairman, Frank Vandersloot and his spouse Belinda. And I additionally did some intensive homework by myself.
I realized that they [Melaleuca] are one of many largest employers within the state of Idaho. Forbes journal ranks them [as] the most effective employers in America. And the Higher Enterprise Bureau has given them a number of awards for ethics and enterprise operations.
They’re significantly completely different than most MLMs.
In regard to whether or not they match the authorized definition of being a multi-level advertising firm. I consider that’s nonetheless debatable, due to the various authorized and casual definitions of the time period multi-level advertising.
However clearly they’ve a legitimate argument to counsel that they don’t fall underneath the definition of being an MLM. They’re definitely completely different than any multi-level advertising I’ve handled.
I used to be stunned to be taught they’ve spent the final thirty years being essential of multi-level advertising firms, for all of the harm MLM does to individuals’s lives.
In regard to the 2 advertising executives that contacted me, asking me to sponsor them, Melaleuca knowledgeable me that they had been appearing in opposition to the corporate’s insurance policies, and that they’ve been sanctioned for his or her actions.
I’m making these corrections as a result of I need to be correct and I need to be truthful to Melaleuca and its advertising executives.
At time of publication Thaler’s video has 41,000 views. Feedback on the video are disabled.
The final consensus of a whole lot of feedback discussing the video on the antiMLM subreddit is that the video wasn’t real.
Addressing these issues, Thaler added this to the correction video’s description;
In response to feedback that this video about Melaleuca was not honest, I guarantee you that it was and it was truthful.
Melaleuca reached out to me and requested me to be taught extra in regards to the firm. I spent many hours with the administration of the corporate and did actually be taught extra about it which gave me the consolation degree to put up the video I did.
After studying extra in regards to the firm, I felt I ought to make a correction to what I had beforehand stated in regards to the firm.
All the things that I stated on this video about them is truthful. I’m transferring ahead and turning my consideration to matters that proceed to curiosity me and hopefully you too.
BehindMLM reviewed Melaleuca in January 2019. Having glanced over a newer copy of Melaleuca’s compensation plan, not a lot has modified.
That stated, sliding retail fee charges to twenty% over 7% in 2019 is a major enchancment.
Having refreshed my reminiscence on Melaleuca, each from our revealed evaluate and a newer copy of its compensation plan, I consider I can weigh in on the 2 key factors that seem to have prompted Melaleuca’s lawsuit.
The primary is whether or not Melaleuca is an MLM firm. It completely was in 2019 and completely is in 2024.
I’m not stating that throughout the context of any detrimental connotations Melaleuca would possibly harbor in direction of MLM, I’m stating it as as a matter of truth primarily based on Melaleuca’s compensation plan.
Earlier than we get into that although, let’s look at Melaleuca’s claims about not being an MLM.
Right here’s Melaleuca’s place, in their very own phrases as revealed in Idaho Falls Journal in 2014.
When differentiating Melaleuca from MLM definitions and firms, Melaleuca CEO Frank VanderSloot says Melaleuca merely doesn’t have a number of ranges of distribution.
Melaleuca doesn’t have “distributors” and its advertising executives will not be salespeople. The position of the advertising government is to refer prospects to Melaleuca, assist them arrange procuring accounts after which prepare others to take action.
Basically, they don’t peddle merchandise like MLM distributors.
VanderSloot backs up this level by displaying Melaleuca’s insurance policies truly prohibit advertising executives from promoting merchandise on to others. As a result of all prospects order immediately from Melaleuca, the purpose of sale occurs immediately between the shopper and the corporate (and never from a salesman or distributor).
This level is a elementary factor in demonstrating how Melaleuca doesn’t meet MLM definitions.
Moreover, VanderSloot says that “typical MLM firms are designed to draw individuals to ‘make investments’ in inventories of product with the promise of getting wealthy shortly by getting others to speculate.
In Melaleuca’s case, there isn’t a funding and no getting others to speculate.”
As a substitute of hoping for a fast win by getting prospects to make massive upfront investments, Melaleuca has sought to develop long-term prospects.
Up to now, it appears as if that technique is working: Melaleuca has a 95 % month-to-month reorder charge. And since there isn’t a funding, nobody has ever claimed they misplaced their funding.
I’ll handle these factors in a second.
Since inception, BehindMLM has categorised an MLM firm as such if it makes use of an MLM compensation plan. Past that an MLM firm can use no matter terminology it needs (together with “we aren’t MLM” rhetoric), but when stated firm makes use of an MLM compensation plan we are going to classify it as an MLM firm.
The particular factor to search for in a compensation plan is cost on quantity throughout a number of ranges. This may be commissions or a bonus – as long as quantity is tracked and paid out over a couple of degree it’s, by definition, multi-level.
Using a number of ranges in a compensation plan additionally brings with it uplines and downline, foundations of any MLM enterprise mannequin.
With respect to Melaleuca’s compensation plan:
- Melaleuca affiliate ranks are tied to “month-to-month group quantity” (GV, which is generated downline gross sales quantity throughout a number of ranges)
- retail commissions are paid on retail quantity generated on as much as seven ranges of downline recruitment
- “group commissions” are paid as a share of gross sales quantity generated by immediately and not directly recruited downline associates
- Melaleuca bonuses require and are paid on gross sales quantity generated by non-personally recruited downline associates (e.g. Core Mentoring Bonus)
Like I stated, primarily based on Melaleuca utilizing an MLM compensation plan Melaleuca is completely an MLM firm.
Melaleuca’s arguments that it doesn’t have distributors or that its associates don’t resell merchandise are unavailing. Neither modifications Melaleuca’s multi-level advertising compensation plan, that pays commissions and bonuses throughout a number of ranges.
At greatest Melaleuca might argue it’s an MLM firm with a “no resale” prohibition clause.
Is that worthy of a whole enterprise mannequin reclassification? In all probability not.
It’s a bit like a toothpaste firm placing the nozzle on the backside of its tubes and demanding individuals cease calling it a toothpaste firm.
“Guys, we put the nozzle on the BOTTOM of the tube. We’re not a toothpaste firm like the remainder of these “nozzle on the highest” scumbags!”
Editor’s word: To the Melaleuca legal professional(s) studying this and probably eager about sending BehindMLM a stop and desist, the above is a joke primarily based on Thaler stating;
I used to be stunned to be taught they’ve spent the final thirty years being essential of multi-level advertising firms, for all of the harm MLM does to individuals’s lives.
By all means make the excellence Melaleuca doesn’t enable resale of its merchandise if you wish to. That’s doesn’t change Melaleuca’s use of an MLM enterprise mannequin and compensation plan. It’s an MLM firm.
As to legitimacy, in reviewing Melaleuca I initially felt the excellence between its retail prospects and distributors was sufficient.
Publish-publication nonetheless, a reader identified Melaleuca classifies their associates as “prospects”. In MLM, a “buyer” isn’t essentially the identical as a “retail buyer”.
This prompted a rethink and slight modifying of the initially revealed evaluate.
Principally what the legitimacy of Melaleuca as an MLM comes right down to is whether or not, company-wide, income is primarily generated from gross sales to retail prospects.
And simply so we’re clear, a retail buyer in MLM is somebody who signed up as a buyer and has no entry to the enterprise alternative.
Which means it doesn’t matter what the retail buyer does in an MLM firm, they can’t and won’t ever qualify to earn commissions and/or monetary bonuses of any sort (product credit or free product are excluded).
As has been established twice in courtroom within the FTC v. Vemma and FTC v. Herbalife instances, contributors who’ve signed up for an MLM alternative that may’t/don’t recruit and/or haven’t earned any commissions will not be retail prospects. They’re contributors within the MLM alternative.
That is from Melaleuca’s compensation plan;
To qualify for commissions, a Advertising and marketing Government is required to “personally produce” income of a minimum of 29 Product Factors per 30 days.
That merely means you should designate varied households who will probably be designated to buy in your Private Manufacturing Account.
You possibly can enable anybody to make use of this account to buy their Melaleuca merchandise.
Many Advertising and marketing Executives use this account to buy merchandise for their very own family.
Whether or not a Melaleuca affiliate’s “private manufacturing account” is counted as a Melaleuca buyer (no retail distinction) isn’t specified.
Whether or not 100% of Melaleuca’s claimed prospects have entry to its revenue alternative was unclear in 2019. It stays unclear at present.
The fast repair to that is Melaleuca being clearer about retail prospects in its compensation documentation, however I digress.
After I come throughout uncertainty like this in an MLM compensation plan, I keep away from utilizing definitive phrases (e.g. “illegitimate”).
The actual fact of the matter is with out additional clarification, customers are left unable to make an knowledgeable determination in regards to the MLM firm in query. The onus is on the MLM firm to supply that clarification (as I’ve achieved above with Melaleuca), and it’s completely acceptable to level this out.
The place Thaler may need erred is in utilizing definitive phrases like “illegitimate”the place, pending clarification, uncertainty within the info disclosed prohibits a definitive evaluation.
I do know that’s an extended winded method of explaining the idea however as a reviewer, be it on an internet site one ones or on YouTube, publishers have duty for the statements they make.
I haven’t seen the video in query as a result of it’s been deleted, however I think about Thaler didn’t clarify why she got here to the conclusion Melaleuca was “illegitimate”.
I anticipate in some unspecified time in the future Melaleuca’s Idaho case docket will mirror a reached settlement between the 2 events. I’ll depart an replace under if that occurs.