How direct selling companies are combating fraud from fake accounts to unauthorized selling.
By David Rauf
They were going out and enrolling their dog, their cat or their goldfish to get the bonus.
—Dan Jensen, owner, Dan Jensen Consulting
There’s all kind of creative ways that people are getting product without paying for it.
—Dan Schwarz, director of global compliance, Forever Living Products
Industry veteran Dan Jensen, who consults with direct selling firms on compensation plans, remembers when one of his South American clients came to him with a concern about their pay structure for distributors. The company had a compensation plan typical for a direct seller that rewarded distributors with a bonus for signing up a set number of preferred customers. But the company was paying out way more in bonuses than expected.
It didn’t take long for Jensen to find the problem. Turns out, distributors were “gaming” the compensation plan by signing up fake accounts with their own credit cards, and the company wasn’t doing its diligence to make sure rules were being followed.
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