Interesting - It was a distributor of yours that was advertising on Craigslist to recruit more distributors? So like, the guy/gal was trying to drum up competition for himself? To the extent that it was your name given in the ads and two of my friends got the same promo message when they contacted your company
through its web site, I gotta really, really wonder.
But it doesn't matter - fact is, someone representing your brand/company went over the top and the buck stops with the owner of that brand/company. If someone represents your company without authorization, there are channels to follow. If someone is authorized to represent your company but does so in a manner or form not authorized, then hopefully you've got a well crafted contract to rely on. But in either case, the reality is that if it's your brand/company, it's your responsibility to protect the integrity of the brand/company.
If it's true that the craigslist advertisments weren't authorized by you and that a distributor of yours was trying to recruit competition for him/herself, I've got empathy for you and it sounds like you did the best thing under the circumstances (ie: ask him/her to stop). If you've got that well crafted contract and choose to pursue damages against this distributor, let me know because I'd be glad to provide a letter to the effect of how his/her activities trashed your brand/company name. If you file a civil suit, I'll also provide the names of
three people I know (one each in ON, BC and Manitoba) who decided not to
buy from you exclusively on the basis on the craigslist promos.
But unfortunately, precisely who did what doesn't change the fact that it was your brand/company used in the over-the-top (and unlawful) promotional campaigns. And just as it was your brand/company that stood to gain from any benefits of such practices, it's your brand/company that gets the backlash.