An industry attorney and a data analyst weigh in on whether these programs are good for your business.
By Jennifer Anderson
3 & Free programs are disappearing from the marketplace almost as quickly as they arrived. While the legal risks are low, they are simply too difficult for companies to enact and enforce.
"The biggest downfall is that companies aren’t thinking of their comp plans holistically."
-- Kenny Rawlins, Vice President IT Systems and Application Development, InfoTrax Systems
Unsurprisingly, direct sales companies have long sought legally viable ways to incentivize distributors to generate sales and attract new recruits. Under the watchful eye of the Federal Trade Commission (FTC), however, many incentive programs have been considered, implemented, and ultimately rejected. Notwithstanding the watchdog efforts of the federal government, two bonus structures have withstood the test of time—so-called "3 & Free" programs and "Fast Start" bonuses.
In this month's Risk Roundup, we examine each bonus type from two unique perspectives: (1.) the legal viability of each bonus structure; and (2.) the data-driven practicality of each method. To get to the core of these issues, we spoke to two industry insiders.
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