Litigation

United First Financial agent compensation plan

By Tracy Coenen

In researching United First Financial and the Money Merge Account, there weren’t many sources of information on the compensation structure for agents. What I do know is this: The official corporate website does not mention “the opportunity” or “business opportunity,” as most other multi-level marketing companies do. I came to the conclusion that the company doesn’t want to be labeled as a MLM or potential pyramid scheme.

The logic is obvious: Consumers are becoming more educated about the pitfalls of MLM. They realize that because the company has to pay so many levels in the food chain of an MLM, the actual seller of a product receives relatively low compensation. If the company wasn’t worried about building and paying the pyramid, there would be far more money to reward and compensate the actual seller of the product.

I was told that agents of United First Financial are paid this way: “The commission structure is similar to the mortgage broker industry, the real estate industry and the insurance industry.”

That seems to make the company and the pay plan legitimate, doesn’t it? Because I don’t often hear consumers complain about how insurance agents or mortgage brokers are paid - on a commission based structure.

But that explanation wasn’t really true. In fact, the United First Financial Compensation Plan looks exactly like the typical pay plan in your average multi-level marketing (MLM) company. UFF pays up to $2,500 to up to six levels of agents on one $3,500 sale.

Sounds great, doesn’t it? They’re paying out a ton in commissions. How wonderfully generous of the company! But the compensation really doesn’t mean that at all. It just means that, like all other MLMs, the customer is paying an inflated price for the product so that all these levels of the pyramid can be paid.

Look at it this way: The associate who actually sells the Money Merge Account concept to a customer is paid $900. UFF itself keeps $1,000 from the sale. Why not just price the plan at $1,900 for customers? Because in order to rapidly grow the number of agents peddling this overpriced, nearly useless product, they need to offer a bunch of others a piece of the pyramid action.

So you have the $3,500 price for the customer, and the people in the upline can get up to $1,600, while the actual seller only gets $900.

If you’ve recruited enough people and your downline makes enough sales, this could increase up to as much as $1,575. You could also theoretically make all those sales yourself to qualify for $1,575. The problem is doing that with the overpriced system. And your upline still gets a piece of the action from the $2,500 total commission.

You can read the entire United First Financial Pay Plan yourself, but here are the highlights:

Branch Manager - 9 sales, 3 of which must be personal (Cumulative 35 sales, 13 personal) - $1,575

Director - 8 sales, 3 of which must be personal (Cumulative 26 sales, 10 personal) - $1,350

Division Manager - 7 sales, 3 of which must be personal (Cumulative 18 sales, 7 personal) - $1,237.50

District Manager - 6 sales, 2 of which must be personal (Cumulative 11 sales, 4 personal) - $1,125

Senior Associate - 5 sales, 2 of which must be personal (Cumulative 5 sales, 2 personal) - $1,012.50

Associate - $900

Just like your garden variety MLM, it is far more lucrative to recruit new members… up to $1,575 for someone who recruits, compared to $900 per sale for someone who doesn’t recruit.

Some will argue that the higher commission levels for people higher in the pyramid are justified because they spend time training and managing the people below them. I disagree. Once you have basic training in your MLM, there is very little other training that goes on. Most “training” events are really recruiting events. So let’s not pretend that there is this massive training effort that needs to be compensated!

A training bonus of $75 to $225 is paid to the person at the top of the pyramid (Branch Manager) for each sale.

There is also a Bonus Pool of up to $225 per sale split between the selling associate and the various Branch Managers in the upline of the associate. The selling associate gets $60 if 3 personal sales are made. The amounts paid to the Branch Managers depend on how many personal sales and “base shop” sales are made.

As with other MLMs, there is a fairly complicated commission structure with lots of buts/ands/ifs/ors that dictate how much you will get. I suspect most agents have no idea who is getting paid what on each sale.

I think it’s clear that this compensation structure is not like any insurance agent or mortgage broker’s compensation. There are many more levels and contingencies. Typical multi-level marketing pay structure.

Full post as published by The FRAUDfiles Blog on May 17, 2008 (boomark / email).