Check to See if a MLM Company is Legal or a Pyramid Scheme

How to check to see if a mlm company is legalProspective distributors often ask how they can find out if a MLM, network marketing, or direct selling company is legal or if it’s a pyramid scheme. There are a number of ways to research the company yourself; to be sure of its legality before joining.

Here are some ways which you can investigate a MLM company:

1) Check to see if it is a member of any industry associations, like the DSA or DSWA.

2) Call your state’s attorney general’s office or consumer protection division. Most states regulate direct selling companies through these agencies.

3) Check with the Better Business Bureau. Continue reading

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Join for the Product or the Compensation Plan?

Join a MLM Company for the compensation plan or the product?What is more important to distributors, the compensation plan or the product?

It is common for distributors to be recruited based on an attractive compensation plan. Instant monetary benefits, promises of instant wealth, and enormous payouts are often advertised by companies. However, no company has ever been successful based on its compensation plan alone. An out-of-this-world compensation plan often gives the company an initial jump start, but time Continue reading

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Is it True that Distributors in MLM have a 95% Failure Rate?

Is it True that Distributors in MLM have a 95% Failure RateSemantics play a role here. For instance, what is the meaning of failure? Does it refer to distributors who do not make substantial enough money, or who don’t make any money, or who lose money?

Because most leading companies offer terminating distributors a 100% or 90% buy back policy for inventory and mandatory sales materials (a full refund of your startup kit, e.g.), the risk of actually losing money is drastically diminished.

Many leading companies offer earnings disclosures that indicate the level of earnings of distributors. It is true that many distributors merely join to become discount buyers. And Continue reading

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Expert MLM Attorney Explains ‘What Are Unauthorized Earnings Claims?’ – Video

Expert MLM Attorney and Legal Consultant, Jeff Babener, explains what unauthorized medical claims are in his video “What Are Unauthorized Earnings Claims?”

Have you seen or heard a direct selling company say something like, “Make $10,000 a month!” or “Guaranteed income of $2,000 weekly!”? Well, these are a couple of examples of unauthorized earnings claims. So, what is legal to tell your distributors about how much income they’ll make? Read (or watch!) what expert MLM Attorney Jeff Babener has to say in this video:

MLM companies and direct sellers are among the biggest sellers of health and cosmetics Continue reading

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The Future of Social Media and Direct Selling

Every company that is serious about direct selling has tried to figure out the best way for consultants to use social media, such as Facebook and Twitter. Companies are trying to develop rules protocol for their consultants on the web. Many network marketing companies decided long ago that it was not in their interest  – not compatible with direct selling – to have their distributors offering products at shopping sites such as Ebay and Amazon.

Because network marketing is a person-to-person business, most companies feel as though the personal relationships developed by distributors are undermined if mass merchandising or retail sales replace direct selling. However, social networking websites are communication tools. The industry has faced the question as to whether social networking is a true communication tool or a recruiting tool. Continue reading

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Products that Sell the Best through Network Marketing

Products that sell best in network marketinAs a general matter direct selling, which is often also referred to as network marketing and multilevel marketing, is a channel of distribution best suited to market consumer products and services directly to the customer, or end consumer. Some business-to-business, commercial companies market their business products and services to other businesses. Many times business-to-business products and services are best suited to be sold by staffed sales professionals, as opposed to the sales consultants used by network marketing companies.

Historically, the products sold by direct selling companies are in the categories of personal care, health/nutritional, cosmetics, jewelry, household products, and technology, etc. These types of products are not only marketed to the end consumer, but the end consumer is often the best candidate to pursue a part-time opportunity in marketing those products Continue reading

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Hard Facts and Statistics about the Direct Selling Industry – Updated for 2015

Some legal case authorities claim that if a consultant announces that they are going to join another MLM company on Facebook then it’s protected under freedom of expression by the First Amendment. Therefore, a company cannot accuse a consultant of raiding their downline for distributors. Other courts and cases have suggested that consultants separate out their Facebook downline from those of friends and family.The Direct Selling Association released the MLM statistics for direct sellers for 2015. The numbers are riveting:

  • 2 million people were involved in direct selling in the U.S. during 2015.
  • Those people sold an estimated $36.12 billion dollars in retail sales, an increase of 4.8% from 2014.
  • 2015 revenues were higher than any other year in history.

In 2014, 18.2 million people were involved in direct selling. In 2015, that number increased by 11% to 20.2 billion people. Of those people, 28.2% were between the ages of 35 and 44. 24.9% Continue reading

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Hard Facts about a Growing Industry – Updated 2016 for 2014

The U.S. sold $34.47 billion in 2014.Did you know that over *18 million people in the United States alone were involved in direct selling in 2014? The estimated sales of these people are $34.5 billion, which is up 5.5% from 2013. Here are some statistics about the industry, overviewing 2014:

  • In 2009, 16.1 million people were involved in direct selling, compared to 15.8 million in 2010, 15.6 million in 2011, 15.9 million in 2012, 16.8 million in 2013, and 18.2 million in 2014. The increase was 8.3% from 2013 to 2014.
  • In 2014, 74.4% of company distributors were women, and 25.6% were men. In 2013 that number was 74.2% for women, 25.8% for men, and in 2012, 76.6% were women and 23.4% were men.
  • U.S. retail sales were $34.47 billion in 2014, $32.67 in 2013, and $31.63 in 2012.
  • In 2014, 71.5% of direct sales were person-to-person, 22.4% were party plan, and 6.1% were other. Compared to 2013 when 70.2% were person-to-person and 22.5% were party plan.
  • 30% of sales in 2014 were in the wellness product group. Personal care was around 15%. Services were around 22%.
  • The highest sales by region goes to the South, were 37.4% of goods and services were sold. The West sold 24.3%. And, the Midwest came in third at 20.5%

Continue reading

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May 2016 Conference was a Success and Statistics

We pulled off some great numbers for the May 20, 2016 conference! In attendance were over 60 companies and 90 people, representing 18 states, the U.S., Canada and Europe!

May 2016 Conference

May 2016 Conference

We appreciate all the guests in attendance, as well as the lineup of incredible speakers.

If you weren’t able to make the May 2016 conference, no problem! We are hosting the next Starting and Running the Successful MLM Company Conference on October 27 and 28, 2016 in Las Vegas.

We invite anyone who is starting or running an existing MLM company to join us! MLM business owners, executives, corporate staff, you’re invited! The classroom-like setting of the conference promotes education, not selling. We work hard to provide you with a fully credible lineup of expert speakers who advise in the areas of recruiting, legal, compensation plans, Continue reading

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Most Requested Video of the Month – Difference Between Sponsoring and Recruiting

MLMLegal.com’s most requested FAQ this month answered in a video by MLM expert Attorney, Jeff Babener: What is the difference between sponsoring and recruiting?

Although the terms sponsoring and recruiting are often used interchangeably, they are actually have two very different meanings. Recruiting is the act of searching and soliciting for new distributors for the downline sales organization of an existing distributor. Of course, the activity carries important responsibilities, such as compliance with company and statutory guidelines on earnings representations, product representations, and representations as to the business opportunity of the company.

Once a recruit has agreed to join the company, a recruiting distributor becomes a sponsor. Continue reading

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