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FTC Raid

If The FTC Raid Your USA Based Company

 

If the Federal Trade Commission (FTC) in the USA raid your network marketing company, the results are devastating for distributors, employees as the owner(s).

Distributors are losing their commissions and credibility under their friends and family (I told you it was a pyramid..), employees are fired and the owners personal assets are seized.

After Vemma settled with the FTC, the rules are clear for companies based in the USA, if you like it or not:

– 51 % volume has to come from customers sales.
– Mandatory auto-ships to qualify for commissions are not permitted and/or a distributor person order can not count towards qualifying for bonuses.

We at Business For Home are surprised that so many USA network marketing companies are not changing compensation plans immediately, and therefore putting their distributors under great danger. Many of them are affiliate driven and not customer driven.

Just 3 random examples of compensation plans which are not compliant:

Plexus Worldwide – a $380 million company based in Arizona requires a monthly autoship:

you can earn a Preferred Customer Bonus on products ordered by your Preferred Customers (requires a recurring monthly Autoship order)

No word about the 51% rule.

Plexus response:

As clearly stated on our website and in our comp plan, Plexus does not require autoship, it is simply an option for convenience.  The reference you quoted was for preferred customers only, and is not connected to distributors qualifying for commissions.

We believe your understanding of the FTC requirements may be incorrect, which is understandable considering the Herbalife and Vemma settlements are different and imply different actions should be taken. 

From any US based company’s perspective, it’s hard to know if we’re supposed to follow the Herbalife example or the Vemma example. Luckily, the FTC indicated that further guidance is forthcoming (we hope in early 2017). 

It’s not as if the FTC expects every company to independently guess their intention and immediately revise their comp plans overnight before that guidance is shared.  Be assured that once that guidance is given, we will make appropriate changes to our comp plan based on their guidance.  We take great pride in being compliant, and will continue to be compliant.

Isagenix – a $890 million company based in Arizona, requires a monthly autoship:

Qualifying Order – An order placed by an Associate (or their retail customer) that has enough QV to satisfy the Associate’s QV requirement to be Active (100 QV).

No word about the 51% rule.

DoTerra – a $450 million company based in Utah:

Commissionable Order: An order that is assigned Personal Volume points, which is timely ordered and paid for by a Wellness Advocate.

No word about the 51% rule.

As a distributor we advice you to ask your company if they are compliant with the 2 rules. Some people might think Donald Trump will step in, however I would not count on such a wild card.

We expect the FTC will take out a company in 2017 to slap again the industry, do not let it be your company…..

 

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