ARBITRARY DOWNLINE MOVES BY COMPANIES SIGNAL LACK OF INTEGRITY
by, David G. Eisenstein, Esq.
The age old maxim that “he who has the gold makes the rules” really fits the MLM scenario where companies often change their Policies and Procedures and always expect their distributors to follow these changes by marching in lock-step behind the company banner, even when it “hurts.” Although there are no reported decisions striking down this practice, that is not to say there will not be any, inasmuch as it is black letter contract law that changing the terms of an agreement mid-stream requires the concurrence of both parties. For now, it would appear the best argument a company has for changing the policies and procedures and making the changes apply to already existing distributors is, where applicable, the company has given notice to its distributors by making any such changes well publicized. The argument for making the changes binding is that the distributor who has notice of the change can choose not to follow the new policy by quitting---not a very practical alternative, especially for well established distributors who would stand to lose big time from such a vote with their feet.
Even more questionable, however, is the practice by some companies of arbitrarily moving downlines around, without the consent of the distributors affected by such moves. Legal arguments against such a company implemented and/or condoned “raiding” of a distributor’s downline run from contract breach of the distributor’s express or implied vested interest in continuing the growth of his or her downline intact, to conversion (a nice way of saying “stealing”). When you add the income lost by a successful distributor to the potential for an award of punitive damages if intentional misconduct by the company can be proven, a judgment against a company found to be in the wrong, in the six or seven figure range, would not be unthinkable.
Often a company is motivated to make the arbitrary downline movement by representations made to it by another distributor or potential distributor. The representations often take the form of, “I will bring you a ton of distributors if you will simply show me some respect by helping me in the short run by putting an active leg of distributors under me, thereby giving me a jump start toward my success.” The company that succumbs to the temptation wrought by such a sweet siren song deserves to inevitably be “bitten in the behind” by the inevitable fallout from a downline move which lacks the freely given consent of the distributor who is the “victim” of the raiding. Even though the change usually only requires just a couple of well placed computer keystrokes on the company’s genealogy program administrative site by a company executive with the right password, such a change can literally ruin victim distributors’ businesses and to some extent, their lives. Even if the offending company does not get sued for this offense, the resulting backlash against a company deriving from a well deserved reputation of lack of integrity based on such moves, makes such strong arm tactics a big mistake.
The distributors who encourage the company to make an arbitrary downline assignment over to them will inevitably suffer the same fate as the company. They will either be hit with a lawsuit for their conspiracy with the company to “steal” the downline of another distributor, or they will some day suffer the same fate at the hands of the company who would stoop to such tactics, the next time another “hitter” comes along who “sweet talks” the company.
