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

Federal Trade CommissionFederal Trade Commission

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)

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