The issue of depth of levels seemed to be a major focus prior to the internet and other non-postal (mail) means of communication. In the late 1980’s, the U.S. Postal service examined the numbers of compensation plan levels to make a determination, whether or not, in its opinion, the depth of levels created a “lottery” element under U.S. Postal lottery laws, that forbid payment based on chance.

Various cases and consents sorted out a safe harbor (at least from the U.S. Postal Office standpoint) for at least four levels (not necessarily agreed to by the direct selling industry). Separately, the Postal Service looked for evidence of “supervisory requirements.” Most companies adopted specific supervisory requirements of sponsors to demonstrate some managerial activity by distributors.

For the past 25 years, little recruitment activity is conducted by U.S. mail and it has been a long time since the U.S. Postal Service has expressed a serious interest in this subject. The issue of levels in a company’s compensation plan has not been the focus of the FTC or state attorneys general in the enforcement of pyramid laws. Instead, the focus for the last two decades has been on the whether or not product/service is purchased in reasonable amounts, the presence of anti-inventory loading and “buyback” rules and an emphasis of sale of product/service to the “ultimate user” as opposed to an emphasis on mere recruitment of new distributors whose primary motivation to make payments or purchases is to qualify in the income opportunity.

Watch the video for a detailed explanation by Jeff Babener, Editor of MLMLegal.com. View all of our new videos and more on our new and improved website: MLMLegal.com!

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

This Video Explains Which Statement is True: Celebrity Endorsements Improve Marketing or Celebrity Endorsements are a Double-Edged Sword.

In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the connection with the product or service, whether or not the celebrity is a user and whether or not the statements of the celebrity appear as truly authentic or merely a “pay for endorsement.”

The use of celebrity endorsement is far less successful in the direct selling industry. In fact, the advertising model for MLM is quite different than conventional advertising. In conventional distribution, such as retail stores, internet or broadcast media, companies pay advertising dollars and endorsement fees to promote the brand. However, in direct selling, the commissions and rewards paid to distributors are effectively the advertising dollars that would be paid in other channels of distribution. Instead, the branding, in direct selling, is accomplished by the promotion of the sales network of the direct selling company. Looking at the success of major companies such as Avon, Mary Kay, Tupperware, Herbalife, etc., the branding task has been accomplished by the distributor force, and generally without the use of celebrity advertising.

One final note on celebrity advertising is that the Federal Trade Commission (FTC) has adopted significant rules on endorsements and testimonials to require clear disclosure to consumers of relationships between endorsers and the advertising company. For a detailed discussion, see www.mlmlegal.com article on this subject:

FTC Guidelines on Endorsements and Testimonials Resource Center.

If you are interested in attending the Starting and Running the Successful MLM Companyconference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

For more information, visit www.mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

Some companies state that you can’t recruit people that you didn’t personally sponsor. If you personally sponsor a friend or family member then why can’t you recruit them to join you at your new company?
The short answer is that company policies have evolved over the years resulting from a combination of increased raiding by distributors who switch companies, on the one hand, and secondly, direct selling companies have become more rigid in trying to retain their sales force, sometimes with good reason, and sometimes appearing to be an “overreach.”
Leading direct selling companies, for instance, around 20 years ago, maintained a policy that required consultants to only offer the opportunity to people that they personally sponsored. That policy was common 20 years ago.
Over time that policy changed. With the increased ease of communication due to technology, many companies asked that consultants not participate in raiding anyone in their organization while they were active with a company. The policy morphed again to require consultants not to sponsor anyone in a new opportunity except for those that they personally sponsored upon leaving for a new company. Then the policy changed again to where companies required that consultants who left a company not sponsor anyone into the new company. In a few instances, some companies have provided non-compete agreements, which aren’t considered fair and not even enforceable as a matter of policy in the state of California. Some companies have gone so far as to tell their distributors that they cannot participate in any direct selling activity for a certain period of time after leaving the company. Almost all states frown on non-compete agreements because they inhibit people from conducting their livelihood. Compared with the policies of twenty years ago, the extremities in policy have morphed extensively in terms of restrictions.
Today, the most common clauses seen are ones in which companies have moved from the concept of ‘don’t recruit anyone unless you’ve personally sponsored them’ to ‘during your time with our company, we ask that you not raid anyone in your sales organization, whether you’ve personally sponsored them or not.’ Most companies today will also ask that former consultants not raid people in their organization and recruit them to another for a period of six months to one year.
Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization. In the party plan arena, companies will often implement restrictions based on product. If you are selling jewelry, for instance, then the company will ask that you not join another company selling jewelry.

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place February 25 & 26, 2016 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

Workplace Prospects:

– People who need to earn extra income

– People who are intrigued by new opportunities

– People who are in a similar line of work, like sales

– People who are high-energy and gregarious

Neighborhood Prospects:

– College students looking for extra money

– Stay-at-home moms/dads who are looking for extra money

– Landlords/tenants

– Members of Neighborhood Watch

– Retired people looking to supplement their income

– Members of community organizations

– People you commonly run into at the grocery store, post office, library…

Service-Provider Prospects:

– Diaper service delivery

– Dry cleaners

– Meter readers/electricians

– Exterminators

– Firemen/policemen

– Gardeners

– Housekeepers

– Postal employees

– Salespeople

Religious Organization Prospects:

– Minister/rabbi/priest

– Ministers of music

– Religious educational directors

– Youth workers

– Members of the religious organization

– Religious community outreach opportunities

Professional Prospects:

– Accountants

– Attorneys

– Dentists

– Doctors

– Nurses

– Hairdressers and salons

Athletic Prospects:

– Clubs

– Fitness centers

– Teammates

– Athletic partners

– Competing teams and their families

School Prospects:

– Alumni associations

– Co-students

– Parents of other children

– Teachers/PTA

Social Contacts:

– New and old acquaintances

– Friends

– Social media networks

– Website networking

– Online forums and groups

Organizations:

– YMCA

– Lodges

– Boy/girl scouts

– Volunteer groups

Other prospects who may be interested in joining your organization:

– Babysitter/child care center

– Bakery

– Banker

– Builder/contractor

– Carpet cleaner

– Department stores

– Druggists

– Florist

– Gift shops

– Health spas

– And plenty more

Solicit the Solicitors:

– All door-to-door or party plan salespeople

– Other direct selling representatives

Relative Prospects:

– Distant relative

– In-laws

– Extended family members

Newspaper Prospects:

– People who are actively looking for part time work

Potential customers and distributors are everywhere. We hope that this extensive list will help to give you some ideas of where you can start to begin growing your network marketing business.

Just remember, you’re lucky to make one sale out of 10. Don’t get discouraged. Embrace rejection. Hard work and confidence will go a long way in your success!

Want to know expert MLM Attorney Jeff Babener’s advice on finding new leads? Watch this video:

Visit us at www.mlmlegal.com to learn more.

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 products in the world. Some of the largest companies are traded on the NYSE. Because of concerns about safety of its customers, as well as FDA and FTC regulatory scrutiny of labeling and product claims, MLM companies expend tremendous financial and professional resources to remain compliant with rules promulgated by the FDA for marketing of health, cosmetic and personal care products. The FDA publishes extensive guidelines for product claims. In the dietary supplement area, Congress has instructed the FDA on such guidelines with DSHEA, the Dietary Supplement Health Education Act of 1994. And, even, with DSHEA exemptions for substantiated “structure function claims”, any claims in the nature of therapeutic treatment of actual medical conditions, are prohibited. And if such claims are made, the products may be removed from the over the counter market as unapproved “drugs”. In addition, the FTC and most states, under deceptive claims laws, prohibit unsubstantiated or misleading claims about products.   MLM companies, in turn, publish extensive compliance guidelines for distributors as to what may be represented or prohibited, by way of “unauthorized product claims” in the marketing of products. Companies take this issue quite seriously, as inappropriate product claims that trigger regulatory action create a risk for the opportunities of all distributors as well as companies.

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

Can online-only starter kits be done in a way that ensures a high perceived value?

There has been a clear trend in recent years to offer sales and marketing support online and in the cloud. In reality, the developmental costs are equal or more in providing such support. The quality of support is quite significant, including: all company forms, distributor agreements and terms, policies and procedures, administrative housekeeping rules, product descriptions and updates, compensation plan descriptions and updates, training, communication tools, back office management of down line sales performance and financial reporting, replicated websites, the list goes on. In reality, the real and perceived value of emerging online sales and marketing support will far exceed the limited (physical) sales kits of “yesterday.”

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing industry, and distributing resources to anyone who visits our website.

Teenage Mutant Ninja Turtles (depicted here in true Babener-fashion by Jeff Babener’s grandson, Sammy) are famous for battling petty criminals, evil overlords, mutated creatures, and alien invaders. MLMLegal.com is famous for squashing MLM myths, spreading knowledge about the network marketing industry, and distributing resources to anyone who visits our website.

Every year MLMLegal.com adds a comprehensive project to its website. Whether it is videos on network marketing, well-researched articles, library of legal cases, or a video miniseries, each year our website is expanded upon. This year is no different.

In 2014, MLMLegal.com committed the highly-regarded article “BurnLounge Appeal Decision: Guidance on Pyramid v. Legitimate MLM and the Role of Personal Use in Pyramid Analysis” to the website.

In 2015, we plan to add 63 new videos to our website and Youtube Channel on the topic of MLM education. Below are some of the topics to be discussed by MLM Attorney Jeff Babener in this new video series:

• What’s the Difference between MLM, Network Marketing, Party Plan and Direct Sales?
• What Is a “Pay to Play?”
• How Much Does It Cost to Start a MLM Company?
• How Do I Raise Capital to Start My MLM Business?
• What Is the Benefit of Recruiting Experienced Distributors?
• What about Gifting Clubs?
• Why Do I Need an Experienced Network Marketing Attorney?
• What Do I Do with Distributors Who Go Passive (for MLM Executives)?
• What Do I Do with Distributors Who Go Passive (for MLM Distributors)?
• What Key Factors Determine the Growth of Network Marketing Companies?
• Do You Have Some Tips for Generating Network Marketing Leads?
• Do You Have Some Tips to Become a Successful Network Marketing Distributor?
• Are There MLM Companies That Have Achieved Success on a Low Budget?
• Since You Are a MLM Attorney, Why Would You Host the MLM Startup Conference for the Executives of Startup and Existing Companies?
• If I’m a New Distributor Then Should I Focus My Selling In Areas Where Other Distributors Are Successful Or Should I Focus On Untouched Territory?
• I Own a MLM Company. How Can I Determine Cost of Goods? In Other Words, How Do I Price My Products for Retail, Distributor and Direct-To-Consumer Sales?
• Do I Need To Worry about Merchant Account Processing? Should I Have Just One Merchant Account?
• If a Sales Kit or Startup Fee Is Several Hundred Dollars, Then Is This Considered “Frontloading”?
• How Do I Create a Compensation Plan That Guarantees That I Am Legal?
• I’m Starting a MLM Company. I Am Going to Have Distributors Earn Income by
  Referring Others, Is This Legal?
• What Should I Look for When Hiring a Vice President of Marketing?
• What Is the Typical Price of an at-Cost Starter Kit in the Industry?
• Can I (as a MLM Executive) Pass the Costs of Website Development, Marketing Materials, Etc. Down to Distributors?
• How Do I Find Top Distributors?
• In an Absolute Nutshell, What Are the Two Main Causes of a MLM Company Failing?
• As a Distributor, Can I Use Display Booths to Sell My Company’s Products? Is There a Limit on the Time I Can Spend Selling at a Booth?
• In Regards to Event Sales, Such as Fairs, Kiosks, Vending Machines, Etc., Am I Authorized to Sell My Company’s Products at Such Events?
• Why Do MLM Companies Require Distributors to Use Replicated Websites Rather Than Distributor-Created Websites?
• What about Raising Capital to Start Your Network Marketing Company?
• How Many People Would I Need in My Organization to Make Over $10,000?
• Are Network Marketing Companies Mostly Moving to All-Digital/All-Online Starter Kits? Can It be Done in a Way That Ensures a High Perceived Value?
• What Regulatory Changes Are Affecting Network Marketing Companies?
• What Should I Look for in a Company When Choosing Back Office Software?
• How Important Are Celebrity Endorsements? Do They Help Marketing or Is It a Double-Edged Sword?
• How Often Should Companies Renew Their Policies and Procedures to Make Them Relevant in Today’s Marketplace?
• Do You Want to Attract MLM Professionals or MLM Junkies into Your Direct Selling Company?
• How Have Raiding Rules Evolved in Direct Selling Contracts and Policies and Procedures?
• What Happens if Consultants Raid Anyway?
• What Are the Most Important Things to Remember When You Host a Distributor Recognition Event?
• Do Incentives Increase Sales? How Worthwhile Are Consultant Incentives?
• What Do Startup Companies Think about Long Term Professional Relationships?
• What Is the U.S. and International Trend in Recognizing the Validity of Personal Use by Distributors in Pyramid Cases?

So, keep your eyes on MLMLegal.com this year. We will have a lot of new content added to our website and we want you to be a part of it! Run, learn and get lost at MLMLegal.com!

For more information on any topic on network marketing that comes to mind, please visit www.mlmlegal.com and www.mlmattorney.com.

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Visit us at www.mlmlegal.com to learn more.

Jeff Babener speaking at the MLM Startup Conference in Las Vegas.

You wouldn’t believe the turnout we had for the October 2014 MLM Startup Conference! Entrepreneurs, executives, founders, and CEOs from 98 direct selling companies registered for the event! Over 160 entrepreneurs registered for the conference! These innovative entrepreneurs represented 31 states and six countries from around the world! Our turnout was fantastic! Thank you to all of our attendees!

Were you able to make it to the best MLM conference in the United States? Do worry! Our next conference will take place February 26th & 27th, 2015. Any executive of a startup or existing direct selling, MLM, network marketing company is welcome to attend. Simply call our office and register by phone: 800-231-2162. Visit our website for additional information: www.mlmlegal.com.

For additional information, visit MLMLegal.com or read about our Innovation Campaign. You can also watch conference videos, read testimonials, find links to more information, and view the next dates at the Innovation Campaign page.

Visit us at www.mlmlegal.com to learn more.

If you don’t start it right, you can’t expect to get it right.

The MLM Startup Conference for Executives of Startup and Existing Direct Selling Companies takes place February 26 & 27 in Las Vegas. This is the 70th annual, two-day conference, featuring industry experts and invaluable tools for the MLM startup entrepreneur. Call our office to register or for additional information: 503-226-6600 or 800-231-2162.

HOW CAN I FIND OUT MORE?

Visit the website:

www.mlmlegal.com

Or, read visit our blogs:

http://mlmlegal.com/MLMBlog/ and http://mlmattorney.com/blog/

Extensive information about the conference can be found here.

Watch the MLM Startup Conference videos:

MLMlegal Releases New Film on MLM Startup Conference – Produced by Networkingstar.com

The MLM Startup Conference in Las Vegas

MLM Startup Conference – A Must for Executives of Startup and Existing MLM Companies

BEST BET? Call:

503-226-6600 or 800-231-2162

Visit us at www.mlmlegal.com to learn more.