Why underwriters look closely at multi-level marketing (MLM)
Pyramid-scheme scrutiny
The FTC asks whether pay is driven by retail sales or by recruiting. Acquirers ask the same question.
Income claims
Distributors posting earnings promises create regulatory and dispute risk.
Autoship and inventory loading
Unwanted recurring orders and stockpiled inventory lead to disputes.
A payment setup that fits
How we usually set up MLM companies. Your consultant tailors it to how you actually sell.
- 1
Autoship with consent and reminders
Opt-in recurring orders, with notice before each one.
- 2
A buyback policy
A repurchase policy for unsold inventory. Industry codes call for buying back marketable product at no less than 90% of cost.
- 3
Commissions kept separate
Distributor payouts handled apart from customer sales.
What you’ll need to apply
Have these ready and your application moves faster. Your consultant confirms the exact list for the processor you’re matched with.
- Government ID for every owner with 25% or more
- Voided business check or bank letter
- Recent business bank statements
- Recent processing statements, if you have taken cards before
- Articles of incorporation and EIN letter
- A website with clear pricing, refund, cancellation and contact details
- Compensation plan
- Income disclosure statement
- Inventory buyback and refund policy
- Distributor agreement and claims policy
Why applications get declined, and how to avoid it
- Compensation based mainly on recruiting
- Distributor income claims you don’t police
- Inventory purchases required to qualify for commissions
We review your website, policies and statements against these before anything is submitted.
Keeping the account healthy after approval
Getting approved is half the job. These habits keep your account in good standing, and our platform tracks the numbers behind them for you.
- Monitor distributors’ social posts for claims
- Make autoship easy to change or cancel
- Publish an income disclosure statement
Multi-level marketing (MLM): common questions
What do acquirers look for in our comp plan?
Whether commissions come from real customer sales or from recruiting. Plans driven by retail sales are much easier to place.
Are we responsible for what distributors post?
To regulators and acquirers, largely yes. Have a claims policy and enforce it.
Can distributors take payments themselves?
Usually sales run through your central checkout. We’ll set the account up around how orders are placed.
What happens after I’m approved?
We keep working with you. Our platform gives you one view of every account, and we review your chargebacks, approval rate, fraud tools and fees with you so the account stays healthy and gets cheaper over time.