DISCUSSION OF SECTION 5.11: RETAILING OR RESELLING

DISCUSSION OF SECTION 5.11: RETAILING OR RESELLING

Section 5.11 is the most frequently used Section in Paparazzi Policies and Procedures by Compliance. It is critical that any Consultant understand the ins and outs of Section 5.11. It states:

5.11 Retailing or Reselling

After the initial product or inventory is purchased, no product can be resold or retailed for less than the Manufacturer's Retail Price. This includes, but is not limited to, offering or advertising free items through buy X, get X promotions or giving free gifts with a purchase. This same policy applies whether the free promotional item being offered is a Paparazzi product or a product not carried in Paparazzi's inventory.

Offering or advertising these types of promotions lowers the retail price of each piece sold below the required Manufacturer's Retail Price minimum. Doing so compromises the entire Paparazzi program for all Consultants. Any promotion of a Consultant's independent business or the Paparazzi Opportunity through any channel of communication (public or private) is considered advertising.

Additionally, giving away free items that are not sold by Paparazzi can lead customers to the assumption that those items are part of Paparazzi's product offering. As outlined in Section 5.13, offering non-Paparazzi products alongside Paparazzi products compromises its good name and can lead to the Paparazzi name and brand being associated with inferior products.

Any exceptions to this policy must be authorized by an official Paparazzi officer in writing prior to the sale or event.

Selling below the retail prices. The first paragraph of Section 5.11 prohibits selling below the retail price. There are many ways a Consultant can violate this policy and sell below retail price—knowingly or unknowingly.

"Buy X, get X promotions." This means a promotion that allows a customer to buy any number of accessories (insert any number of accessories here) and get any number of accessories (insert any number of accessories here) free. The effect of a buy X, get X promotion is that the free item devalues the already low prices of the other accessories the customer purchases at that time. For example, if a customer buys five (5) accessories and gets one (1) accessory free, all six (6) accessories have sold for less than the total retail price of six (6) items. All six items have been discounted, which violates Section 5.11. There are two exceptions to the buy X, get X rule.

A. Exception #1: The Frequent Buyer Card is a buy X, get X exception designed by Corporate Paparazzi to allow Consultants to reward loyal customers and is a buy 12, get 1 free. This exception is not found in the Policies and Procedures; it is an exception to the enforcement of Section 5.11 provided by Paparazzi. The Frequent Buyer Card is not intended as a one-time sales pitch, although a customer can buy 12 accessories at once and be rewarded.

B. Exception #2: A Consultant can do a "buy X, get shipping free" OR "buy X, get tax-recoupment free." In this context, the accessories still sell for the retail prices. The free shipping or free tax-recoupment must be used on the current order, not on future orders. Any time a Consultant sells "tax-recoupment free," they need to be aware of all sales tax requirements, and we recommend they consult their tax professional. (See: GENERAL SALES/USE TAX RECOUPMENT OR REIMBURSEMENT/NEXUS)
Another way to violate the policy against selling below the retail prices is to offer a coupon, bling bucks, or Paparazzi gift certificate as a prize for a giveaway. For example, if a customer receives a coupon to use on their next order and the customer then purchases five (5) accessories, each of those five (5) accessories actually sells for less than the total retail price of an item (the coupon provided a discount on each accessory), hence selling below the already low retail price.
Another way to violate the policy against selling below the retail prices is to sell mystery bags with extra Accessories. For example, if you have ten (10) bags and two of the (2) bags have an extra item in each, the items in those two bags will sell below the retail prices—one bag with three (3) pieces selling for the cost of two (pieces), means the three (3) pieces in each bag will have sold at a discount.
Another way to violate the policy against selling below the retail prices is to include a free piece in the package with the order "just because." This reduces the price paid for all the of Accessories in the order.
Another way to violate the policy against selling below the retail prices is to charge an excessive "shipping" fee for free accessories, such as a $100 shipping fee for 100 accessories, thereby only thinly disguising the attempt to sell below the retail prices.
Another way to violate the policy against selling below the retail prices is to auction off items. So in auctions, you need to start at the retail prices. Of course, in an auction, the items are unlikely to sell for the retail prices. If you start the auction of an accessory at the retail price, please keep in mind: GENERAL SALES/USE TAX RECOUPMENT OR REIMBURSEMENT/NEXUS.

A. Exception #1: If you donate accessories to a charity and the charity raffles or auctions off the items, that is allowed. The Consultant must not be involved in the auction after the initial donation.

Giving gifts with a purchase.

The core rule of Section 5.11 is simple: All Paparazzi Accessories must be sold at their listed retail price. Anything that lowers that price—directly or indirectly—is not allowed. This most often happens through promotions.

If a customer buys multiple pieces and receives an extra Accessory for free, the total cost is spread across all items. That means each piece is effectively sold for less than its retail price. Because of that, “buy X, get X” offers and free gifts with a purchase are not allowed.

There are only two exceptions to this rule: the Buy 10, Get 1 Free and Buy 12, Get 1 Free (Frequent Buyer Card) programs. These are the only approved ways to tie free Accessories to a purchase. They can be honored across all sales channels, even if they have to be fulfilled manually, and you can charge shipping for the free Accessories.

Outside of those exceptions, purchases should not earn free Accessories.

Another requirement of Section 5.11 is not "giving gifts with a purchase." If you require a purchase to enter or win a giveaway, or if you reward the purchase, this is a violation of Paparazzi Policies.

Some examples of violations of this type would be:

A Consultant offers, "Shop my replicated website (*purchase*), and I will give you an extra accessory/free shipping on your next purchase." This Consultant is rewarding a purchase.
A Consultant offers, "Pay your invoice before midnight tonight (*purchase*), and you will receive a free accessory in your package."
A Consultant offers on a live video, "Every time you purchase tonight (*purchase*), your name will be entered into a drawing for ten free accessories." This is a violation, even if there are other ways to enter or win the giveaway besides purchasing.
A Consultant requires a customer to buy (*purchase*) before they can play a game on a live video. Example: the Consultant labels the back of the accessory tag with a number or color, and when a customer selects that accessory for purchase, they receive a prize or can play a game.
A Consultant conducts a raffle—selling chances (*purchase*) to win a prize. This also includes selling squares or numbers for a chance to win.
A Consultant sells bingo cards (*purchase*) to people so they have a chance to win.
A Consultant charges admission (*purchase*) to an event, where attendees may win a giveaway for attending.
Customers cannot be required to make a purchase for a chance to win a prize. Promotions like “buy to be entered” are not allowed because of state and Federal Trade Commission laws.

However, not all promotions are discounts.

You can reward customers for participating in your business, as long as no purchase is required. For example, you can give away a free Accessory for actions such as signing up, joining a live, or engaging in an activity. In these cases, the Accessory is free, though you may charge shipping.

You can also offer free shipping on any order or as a promotion. Shipping is a service, not part of the Accessory price, so it does not reduce the retail value of the Accessories.

Finally, be mindful of offering non-Paparazzi items. Giving away outside products alongside Paparazzi Accessories can create confusion about the brand. Non-Paparazzi items should only be used in share giveaways where no purchase is required and must remain clearly separate from Paparazzi sales.

Selling non-Paparazzi alongside Paparazzi. Another common violation of Section 5.11 is selling/promoting or offering non-Paparazzi items alongside Paparazzi accessories. Although non-Paparazzi content may exist on the same page, Paparazzi Content must stand on its own. This requirement against promoting, selling, or giving away non-Paparazzi also appears in Sections 5.10, 5.11, 5.13, and 5.15. Mixing products may give customers the mistaken idea that non-Paparazzi items are affiliated with Paparazzi or are Paparazzi products.

There are numerous ways that offering/promoting/selling non-Paparazzi can violate policy. Here are some examples:

A Consultant should not offer Back Office items for sale or giveaway. They do not have PV and are not intended for resale. While one may think they are "Paparazzi items," they are considered non-Paparazzi because they are not Paparazzi accessories and are intended for Consultant use only. Note: Paparazzi-branded bags received through promotions with Paparazzi– if the promotion designates that the bags can be given away–can be filled with Paparazzi Accessories (mystery bags) and sold for the price of the Accessories (bag given away).
A Consultant should not create products with the words "Paparazzi" or "Paparazzi Accessories," the corporate symbol (the crown), and/or with the Independent Consultant Logo and sell or give them away.
A Consultant should not charge their downline for training, going Live, business materials, graphics, etc.
A Consultant should not mention, or promote their job or other products and businesses (including household or third-party businesses) in Paparazzi Content (including: posts, reels, albums, or lives).

Consultants may advertise their jobs or other businesses, including household businesses, on the same feed or timeline where Paparazzi is sold, as long as those businesses do not appear in Paparazzi Content. Rule: One post = one business. This clear separation helps eliminate confusion and keeps each brand strong. (See SELLING ALONGSIDE).