What is “Front Loading” or “Inventory-Loading?”

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Front loading is when a MLM company requires a consultant to purchase an unreasonable amount of inventory that cannot realistically be resold and/or used within a reasonable amount of time.

Apart from general pyramiding accusations, the direct selling industry can learn from the Federal Trade Commission’s (FTC) specific allegations of improper activity. The FTC includes front loading as inappropriate activity stating:

Front-loading or inventorying of product in which excessive product purchases are viewed as prohibited consideration for the requirement that individuals make an initial investment of product purchased to engage in the opportunity.

Read the full article here: http://mlmlegal.com/MLMBlog/?p=616

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FTC

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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