| Multi-level marketing (MLM) or network marketing | | | | it offers. That applies even if you're repeating claims |
| programs are a method of selling goods or services | | | | you read in a company brochure or advertisement. |
| through distributors. These programs typically promise | | | | The Federal Trade Commission advises you to verify |
| that if you sign up as a distributor, you'll receive | | | | the research behind any claims about a product's |
| commissions for your sales and those of the people | | | | performance before repeating those claims to a |
| you recruit to become distributors. These recruits are | | | | potential customer. |
| referred to as your "downline." | | | | In addition, if you solicit new distributors, you are |
| Some multi-level marketing programs are legitimate. | | | | responsible for the claims you make about a |
| However, others are illegal pyramid schemes. In | | | | distributor's earning potential. Be sure to represent |
| pyramids, earned commissions are based on the | | | | the opportunity honestly and avoid making unrealistic |
| number of distributors recruited. Most of the product | | | | promises. If those promises fall through, remember |
| sales are made to these distributors--not to | | | | that you could be held liable. |
| consumers in general. The underlying goods and | | | | The Federal Trade Commission (FTC) suggests that |
| services, which vary from car leases to cosmetics to | | | | you use common sense when evaluating a multi-level |
| vitamins, serve only to make the schemes look | | | | marketing opportunity and consider the following tips |
| legitimate. | | | | before you make your decision: |
| Joining a pyramid is a risky proposition because the | | | | 1. Avoid any program that pays commissions for |
| vast majority of participants lose money to pay for | | | | recruiting additional distributors. It may be an illegal |
| the rewards of a lucky few. Most people end up with | | | | pyramid. |
| nothing to show for their money except the | | | | 2. Beware of programs that ask new distributors to |
| expensive products or marketing materials they're | | | | purchase expensive inventory. These programs can |
| pressured into buying. | | | | collapse quickly--and also may be thinly-disguised |
| If you're thinking about joining what appears to be a | | | | pyramids. |
| legitimate multi-level marketing program, take time to | | | | 3. Be cautious of programs that claim you will make |
| check out everything about the program. For | | | | money through continued growth of your |
| example: | | | | "downline"-the commissions on sales made by new |
| What's the company's track record? What product | | | | distributors you recruit--rather than through products |
| does it sell? Does it sell products to the general | | | | you sell. |
| public? Does it have the evidence to back up the | | | | 4. Beware of program that claim to sell miracle |
| claims it makes about its product? Is the product | | | | products or promise enormous earnings. Just because |
| competitively priced? Is it likely to appeal to a large | | | | a promoter of a program makes a claim doesn't |
| customer base? How much is the investment to join | | | | mean it's true! Ask the promoter of the program to |
| the program? Is there a minimum monthly sales | | | | substantiate any and all claims with cold, hard |
| commitment to earn a commission? Will you be | | | | evidence. |
| required to recruit new distributors to earn your | | | | 5. Beware of shills--"decoy" references paid by a |
| commission? | | | | programs promoter to describe their fictional success |
| Be skeptical if a distributor tells you that for the price | | | | in earning money through the program. |
| of a "start-up kit" of inventory and sales | | | | 6. Don't EVER pay or sign any contracts in an |
| literature--and sometimes a commitment to sell a | | | | "opportunity meeting" or any other high-pressure |
| specific amount of the product or service each | | | | situation. Insist on taking your time to carefully think |
| month--you'll be on the road to riches. Many times | | | | over your decision to join. Talk it over with your |
| participants spend a lot of money to "build their | | | | spouse or partner, a knowledgeable friend, and an |
| business" by participating in training programs, buying | | | | accountant or lawyer. |
| sales leads or purchasing the products themselves. | | | | 7. Do your due diligence! Check with the Better |
| Far too often, their own purchases are all they will | | | | Business Bureau and state Attorney General's office |
| ever see for their investments. | | | | about any program you're considering--especially |
| Also, if you decide to become a distributor, you are | | | | when the claims about the product or your potential |
| legally responsible for the claims you make about the | | | | earnings seem too good to be true. |
| company, its products and the business opportunities | | | | |