MLM Intel’s Intro to MLM, Part 3: A Case Study

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Through case work, I’ve recently identified a particular operating methodology for a well-known MLM. Basically, if the independent distributor (ID) leaves the MLM company, the distributor’s customers have no protection or consumer guarantee, because they cannot get an exchange or refund from the main company (the MLM) if they are unhappy with the goods.

The way the MLM entity and how it structures its relationship to the ID may be a reason for this. They achieve this by saying that the ID is an independent business, and not associated in ANY way to the MLM entity. And indeed, this is what they say in their terms and conditions document.  Essentially, this MLM (and probably others like it), is selling product to IDs for a wholesale $$ amount (on a sliding scale of discount, depending on what amounts the IDs order), so the customer refunds/exchanges have to go through the ID directly, as the ID is in fact the ‘retailer’, for lack of a better word.

This is a problem, of course, if the distributor leaves the MLM, and the purchaser decides to return, refund, or exchange an item. They are now no longer covered under any consumer guarantees, warranties or other promises, as the onus of responsibility (the independent distributor) has now left, and the MLM has denounced it in the first instance. This method has been observed in documents that the MLM provides to all its new distributors, clearly outlining the removal of any responsibility from the MLM to the distributor — yet it is shrouded in such vague and legally-loaded language that even I, who reads legislation often, was confused by it. (I’m not a lawyer, but I work in an area that deals with legislation daily).

Read the rest of MLM Intel’s case study here.

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