Did The FTC Just Shape The Future Of Multi-Level Marketing?

Federal Trade Commission

Posted By: Admin2 Editor November 18, 2015

By: Seeking Alpha

On November 12 the FTC approved Vemma’s New Compensation Plan.

The plan states participants may not “qualify” with their own purchases therefore removing any motive to inventory load (regardless of self-consumption).
Herbalife’s supervisor level is consistently proven to be motivated by self-qualifying and self-consumption.
If the FTC set the tone with Vemma, other “MLMs” may face a drastic slowdown in sales.

As a refresher, the FTC action against Vemma required that no commissions are paid to affiliates since October 8. Affiliates will now begin to receive commissions on downline participant sales beginning early December. A couple of key points:

Affiliates can no longer qualify for commissions through their own purchases
A new “51% rule” prohibits the payment of ANY commissions if 51% or more of commissions are earned from affiliates (downline)