Many multi-level marketing programs have a buy-back rule, provision, or program. In these plans, the company agrees to re-purchase product that a distributor wishes to return. Usually there are a lot of rules and requirements including: the product must be in new condition, time limitations, and fees or deductions from the wholesale price the distributor paid.
Buy-backs are available to distributors for a couple of reasons. First, they help MLMs comply with FTC laws that plans illegal (pyramid schemes). However, having a buy-back program itself does not make an MLM company legal. The FTC will look at each company individually. For example, some buy back programs aren’t very good, distributors don’t know about them, or they are too hard to use. Check out more in the FTC guidance for MLM businesses here.
Buy-back programs help convince recruits that multi-level marketing opportunities are lower risk or “risk free.” However, it is important to read the terms and conditions carefully. These programs might change and they have many rules. Famously, LuLaRoe’s 100% buy back was changed with little notice and consultants couldn’t return merchandise. Consultants lost money.