The Origin and Operation of the Famous 70% Rule Explained

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The 70% rule derives from the 1979 FTC Amway decision in which an administrative law judge recognized that Amway’s 70% rule helped prevent inventory loading (it is not a retailing rule). Basically, the Amway rule provided: at the time of ordering by a distributor, don’t order more inventory unless you have sold or personally used at least 70% of what you have previously ordered. This is one of the Amway “safe harbor” rules that you will see in the policies of leading direct selling companies.

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Topics:  Amway, Distributors, FTC, MLM Industry

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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