Unlike in the U.S., Network Marketing in Canada has a clear advantage over many countries (including the U.S.): sections 55 and 55.1 of the Competition Act.
Yes, if you are involved in MLM in Canada, you benefit from having a law that clarifies what is and isn’t legal. In the U.S., the only clarification of whether you are participating in what has a probability of being legal (or not) is legal precedent and The Business Opportunity Rule, created by the FTC in effect in 2013.
Though it is nice to have a Network Marketing law in Canada, the legal precedent in the U.S. legitimized MLM for other parts of the world, including Network Marketing in Canada. Amway vs. the FTC (Supreme Court decision in 1979) was necessary to establish our industry’s legitimacy.
Interestingly, the industry was over 40 years old when Amway won that decision in the Supreme Court!
Another advantage that Canadian MLMers have today is proximity to the U.S.. It is easy for Canadians to prospect people south of the border and cheap to call (+1 and no long-distance fees other than a $5 monthly add-on to our cell phone bill). So, we have an MLM Law and easy access to Canadians and Americans.
As you can see, I am MLM-positive and an industry insider, but I think it is interesting to note that Network Marketing in Canada has been crazy at times. Look at Amway, which paid a massive $25 million fine for defrauding the Canadian government on import duties (import tax) for years and pleaded guilty in 1983.
The quote below comes from an article on Carnegie Mellon University and puts into perspective how hefty the fine was at that time; “On November 10, 1983, before Chief Justice Evans of the Supreme Court of Ontario, the Amway Corporation and Amway of Canada Ltd. pleaded guilty to charges of criminal fraud and paid a C$25,000,000 fine, the largest ever imposed in Canada. The crime was tax evasion.”
There have been other strange cases that this author could include in this Network Marketing in Canada article, but let’s refocus on the positive.
By memory, it was 1988 or 1989 when the law (Competition Act 55 & 55.1) changed, and the result was participants of Network Marketing in Canada had to share (or present) the actual incomes of most participants when making Income Claims, which includes one’s income.
Yes, your income, which you can prove, is still, by definition, an Income Claim, and actual income means the average income of “typical participants” during a given period.
Of course, because many people quit the business without doing anything, and others quit because they never learn skills and quickly tire of rejection, the average incomes of typical participants will always be low.
With the update of the law, the idea of top earners stating average incomes on stage at a public presentation became undoable, even though the law allows anyone to communicate or present their actual income publicly. The problem was that they also had to share the (average) income or typical participants in a timely fashion (in the case of a stage or webinar presentation, timely would mean during that presentation). And this is also necessary during one-on-one presentations, too.
In 2008, this portion of the Competition Act was changed again (55 & 55.1), with several amendments, including concerning websites and the World Wide Web, which is understandable, as marketing MLM online was growing.
The Direct Sellers Association of Canada, an organization that serves all types of direct selling companies (including Network Marketing) and suppliers to those companies, has existed since 1954.
On their website are resources for people who want to start a side hustle career, which includes participating in Network Marketing in Canada. The image below shows part of that web page, and there is a link from the screenshot to that webpage, too, should you wish to check them out.
The Direct Sellers Association of Canada (DSAC) has an education fund (DSEF) for enlightening the public. Strangely, this author found no evidence of videos on the DSAC website showing the type of education they have made public.
MLMinar will contact the DSAC to get copies of their education and update this article once it is received if that information contains education on Network Marketing in Canada.
On the home page of the Direct Sellers Association of Canada are sales figures that we took a screenshot of to turn into a clickable infographic:
n an article on the World of Direct Marketing website by guest author Peter Maddox of the Direct Sellers Association of Canada, Peter shared that Direct Selling figures rose to $4.15 billion in Canada in 2020. Of course, a large percentage of those sales are from Party Plan and Network Marketing in Canada.
In that article, Peter also shared that there were 1.39 million independent sales consultants in the direct selling industry in Canada (population 38 million). That breaks down to 25% who are inactive and 70% for whom direct selling is a side hustle (5% are full-time).
The spike was likely partially due to the pandemic when many people preferred to shop directly or online rather than in public, where it was possible to catch COVID-19.
In 2019, retail sales from direct selling were $3.29 Billion in Canada.
The Competition Bureau Canada portion of the Canada.ca website clearly states: “A multi-level marketing plan is a legal business model for selling goods and services.”
That web page briefly describes the difference between an illegal pyramid and a legal Network Marketing or MLM opportunity.
Also included on this web page are illegal practices in Network Marketing in Canada:
“It is also illegal for a multi-level marketing plan to do any of the following:
These types of activities would be considered pyramid selling under section 55.1 of the Competition Act.”
If this author could make one change to those four bullet points, it would be to add the word ‘merely’ to the phrase “offer compensation for recruitment.” That way, it would be easier to understand that you can sell products to someone you recruit and earn a small commission on that sale, as long as you do not try to inventory load your new recruit.
A more detailed information packet is available as a PDF download from the Canadian Government website, which appears to have been updated in 2022. Click the image below to download it (it is worth the read if you intend to make a career in MLM):
There have been several serious Network Marketing company startups in Canada, including one by this author. Few have become substantial in size in terms of International growth. Exceptions to this include Oregano Gold, Opulence Global, Immunotec Research, and Sipology (formerly Steeped Tea).
Of the four, this author must share a few things about three of them (and this list should not be considered an endorsement):
Soon, this author will write a detailed article on MLM Companies in Canada and link to this article.
As always, if you leave a comment below, we will respond and answer any comments or questions you have.
~End of Article~
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