Blog Archives

70 Percent Rule

Common sense is not all that common. – Anonymous When putting together a good set of policies and procedures for an MLM startup, common sense requires that companies adhere to something called “the 70 percent rule.” At its core, the

Posted in 70 Percent Rule

Whole Living v. Tolman (D. Utah – Nov. 9, 2004)

The best sentence from this decision is that “[w]hether a multi-level marketing plan operates as an illegal pyramid scheme is determined by how it functions in practice.” A company can have perfectly drafted policies and procedures but if they are

Posted in 70 Percent Rule, Pyramid Scheme

Webster v. Omnitrition (9th Cir. – March 4, 1996)

Omnitrition was a nutritional supplement company that sold its products through “independent marketing associates.” In this landmark decision, the 9th Circuit Court of Appeal essentially held that the mere fact that the company sold real products and that it required

Posted in 70 Percent Rule, Landmark Cases, Pyramid Scheme, RICO, Securities Law

In re Amway Corp. (FTC – May 8, 1979)

 This is the MLM case, which is what made the MLM business legal for countless companies to follow. The following “Amway safeguards” help protect a company from being a pyramid scheme: 10 customer rule: To encourage retail sales, Amway representatives must

Posted in 10 Customer Rule, 70 Percent Rule, Income Claims, Landmark Cases, Pyramid Scheme
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