Jueves, 15 Marzo 2012 11:09

Belgian Court Decision against snowball scheme

(Brussels, 28 November, 2011. Multilevel Marketing (MLM)-Company was adjudged by the Commercial Court in Belgium (A.R. 2004/7787) due to a prohibited snowball scheme.

    The Brussels Commercial Court has found a MLM-Company responsible for promoting a pyramidal system (in breach of Articles 91, 14 and 99 of the Belgian Act regarding market practices and consumer protection), whereby a consumer or a business stands to make money more likely by introducing new consumers or businesses into the scheme than from the sale of the products

      The Court based its decision on the following points:

  1. Distributors get higher profits out of the indirect profit payments (from the sales to the down-line-distributors and from bonuses calculated over the total sale of products by the down-liners) than out of the direct profit by the sale of products to end-consumers.
  2. The Distributor’s benefit is based mainly on the purchase of the products rather than on its sale.
  3. The up-liner-distributors seek to expand the hierarchical network by recruiting lower placed salespeople and realize profit from products purchased by the downliners, rather than by the sale of the products to end-consumers.