SECTION 6: Network Marketing and the Law
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should
Know, Jeffrey Babener, Legaline Publications
MLM consultant practice tips. MLM Compensation
Plans come in all forms, including unilevel, stairstep, matrix, binary,
etc. Proper implementation requires consultation with an MLM
Consultant on MLM Consulting, an MLM Attorney and MLM Law Provider and
MLM Software provider for input on MLM technology and MLM Software Programming.
. MLM Legal and MLMLegal.com and Babener and Associates provides
expert MLM Consultant and MLM Consulting advise on MLM corporate, MLM
software, MLM Compensation, MLM Taxes, etc. MLM Consulting is an important
component for MLM startup. Careful Choice of MLM Software is another
component of MLM Corporate. A MLM Consultant and MLM Law and MLM
Legal is part of the MLM Startup Team. MLM Compensation must be
reviewed by an MLM Consulting standpoint by an MLM Consultant and MLM
Legal and MLM Law professional and programmed by a MLM Software and
MLM Technology provider.
Legal or Pyramid?
Because of the abuses of the "rotten apples" of the industry, multilevel marketing has become a closely scrutinized and regulated industry. Regulations regarding multilevel marketing companies in the United States are a constantly changing patchwork of overlapping laws, which lack uniformity and vary from state to state.
The basic thrust of these statutes is that marketing plans are prohibited which require an investment or purchase by sales representatives for the right to recruit others for economic gain. Under these statutes, multilevel marketing companies must be bona fide retail organizations which market bona fide products to the ultimate consumer. Inventory loading and "headhunting," or remuneration for the mere act of recruiting others, are prohibited. Sales kits should be sold at actual company cost to sales representatives.
In the leading legal decisions, a variety of abuses have been targeted as potential elements of illegal marketing plans:
1. Products which have "no real world" marketplace, i.e. the marketing program is a façade for a scam.
2. Products which are sold at inflated prices.
3. Plan which result in inventory loading or "buy-in" qualification by distributors.
4. Substantial cash investment requirements.
5. Mandatory purchases of peripheral or accessory products or services.
6. Plans in which distributors are left with substantial unsold inventory upon cancellation of participation.
7. Plans in which fees are paid to distributors for headhunting and emphasis is on recruitment rather than sale of product.
8. Earnings misrepresentations or inflated earnings
representations.
DIRECT SELLING/DIRECT SALES consultant
practice tips. DIRECT SELLING/DIRECT SALES International Expansion requires
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component for DIRECT SELLING/DIRECT SALES startup. Careful Choice
of DIRECT SELLING/DIRECT SALES Software is another component of DIRECT
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Consultant and DIRECT SELLING/DIRECT SALES Law and DIRECT SELLING/DIRECT
SALES Legal is part of the DIRECT SELLING/DIRECT SALES Startup Team. DIRECT SELLING/DIRECT SALES Compensation must be reviewed by an DIRECT
SELLING/DIRECT SALES Consulting standpoint by an DIRECT SELLING/DIRECT
SALES Consultant and DIRECT SELLING/DIRECT SALES Legal and DIRECT SELLING/DIRECT
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