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NFLI buy-back program
The babble about buy-back
It has become standard practice among mlm's to offer a buy-back
While this practice was initially instituted at the behest of
regulators, it actually helps the mlm company by overcoming
the objection prospective distributors might have about the
likelihood that they will be able to sell the products they have purchased.
The Illinois agreement with NFLI provides that distributors can
get back 90% of what they paid for product that has been purchased
in the recent past (the press release is not explicit about this,
but typical provisions provide for buyback of products purchased
in the last 90 days).
The press release also doesn't say anything about who must
buy back the product (the distributor's sponsor or NFLI) nor about
what might happen to any bonus commissions earned.
In fact, at any given time, a distributor is likely to be hoping
that this will be the month that they start seeing enough bonus
commissions to cover the cost of the products they have purchased,
so that they can continue to participate in the program without
an extensive time committment and/or negative cash flow.
Bottom line on buy-back programs
The effect of buy-back programs is to make the job easier
on the regulators, without offering effective protection to
That's because distributors who get some compensation when
they leave the program are less likely to complain than
those who get nothing.
Companies potentially could even require a statement from the
distributor that bars future action against the company
in exchange for this compensation.
Additionally, prospective distributors are unlikely to consider the
consequences that could occur if they were to rely
on the buy-back provision.
Regulators should have incorporated additional requirements
pertaining to the buy-back provision:
The buy-back provision must make clear whether NFLI or the
sponsor has primary responsibility for making good on the buy-back
If this is the sponsor, and the sponsor fails to make good on the
buy-back provision, then NFLI must make good on it.
The buy-back provision must allow for return of product in unopened
condition purchased within the buy-back period, without regard to
previous statements made by the distributor implying that the
product was actually sold to customers.
The buy-back must not be conditioned on any statement that the buy-back
constitutes a settlement or on giving up any rights to take
legal action against the company.
Any written material (including Web pages) that describe the buy-back
provision which is intended to be presented to prospective distributors
must fully describe the consequences of invoking the buy-back provision,
e.g. loss of future bonuses from the existing downline organization.
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