Visalus, known for its health drinks and nutritional products, has filed for bankruptcy. Its rise and fall highlight the impact of legal and regulatory challenges on businesses.
What led to Visalus’ collapse, and what lessons can other companies take from this? Let’s explore.
About Visalus Files Bankruptcy
Visalus is one of the biggest MLM companies that started its functioning in 1997; at Its maximum development, it counted more than 114 thousands distributors and gained hundreds of millions of revenues.
However, the luck run out for the company in April 2019 when a jury directed Visalus to produce $925 million for breaching the Telephone Consumer Protection Act (TCPA). This was made out of marketing calls where the calls themselves were legal, but became unlawful at the time that they were made because of a gap in the law.
This enormous fine had a devastating effect for the company. Despite efforts to remain friendly and somewhat help from the Federal Communications Commission (FCC) the pressure of money was too much.
As the Ninth Circuit Court requested the review to evaluate the constitutionality of the case, Visalus could not afford the costs of litigation.
In the end, it was decided to sell all of the assets that were owned by this company. Visalus declared that in the event of it fileing for bankruptcy, it plans to divest its assets and shut down its operations altogether. A creditors’ meeting will be scheduled to be held on January 8, 2025, to formally shut down the company.
The case of Visalus is a perfect example of the Red Queen’s effect, that we must always adapt legal regulation and fail to do so perhaps leads to total business failure.
Warning To Other Businesses
Visalus’ demise is closely related to the importance of realising legal requirements in the operation of the company.
Visalus fell to the independence of the Telephone Consumer Protection Act (TCPA) intended for preventing consumers from being harassed with telephone calls from telemarketers. What seems to worsen the situation even more is that the referred calls are legally allowed at the moment and consented by the recipient.
The case shows that laws can be repealed and replacing rather quickly, and this flexibility brings costly repercussions if the business is waywardly slow in adjustment. This seemingly placed the company or brand Valuslus at the wrong side of the legal reforms hence struggled to keep up and therefore, failed.
It serves as a warning to other businesses: neglect to revelant legal changes can kill the most successful business.
Despite the fact that Visalus is shutting down, the products will still be available through LaCore Enterprises and Shoply’s “Vi” line branded products which the public raises eyebrows on the continuity of the firm.
Many businesses have already been impacted by the TCPA and Visalus is most certainly not going to be the final organisation to suffer as a result of the act. Corporations need to consult with lawyers and learn from such an experience to prevent the repeats.
Still, Visalus’ story is an important lesson that no brand is safe from fall of and adaptation to legal change marks the only way for surviving the storm.
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