Retail sales are believed to be non-existent, with the company’s affiliates instead trained to sign up for autoship themselves and then recruit other affiliates who do the same.
As we wait for a September 3rd hearing to decide the fate of Vemma, now a warning from the FTC to other MLM company’s operating in a similar manner.
Published on August 26th, the FTC’s warning was written by Lesley Flair, a senior attorney with the FTC.
Flair explains the finer points of the Vemma complaint, before going on to issue a direct warning to other MLM companies:
“Clients” in this case I believe are either that of a lawyer’s clients (the MLM companies themselves), or affiliates in those companies (from a company perspective, the FTC are referring to affiliates as “clients”).
Either way, if you’re in an MLM opportunity and your commission check is mostly paid out of recruited affiliates making product orders (on autoship or otherwise), according to the FTC you need to immediately change the focus of your business.
Two prominent examples that are currently heavy on affiliate recruitment and autoship are Total Life Changes and Jeunesse. But they are by no means isolated cases. This problem is currently widespread throughout the MLM industry.
As a long time proponent of retail in MLM, all I can say is the sooner the focus is back on retail customers the better.
I have been an advocate for a real “Customer Centric” modeled MLM hybrid. Now the FTC and SEC are adding the pressure to push this industry that way. This is a good thing! What is a “Customer Centric” MLM going to look like? Good question and I have addressed that with this blog here:
Alan Zibluk Market Hive Founding Member