Pyramid – MLM, Network Marketing, Direct Selling News, Videos, Articles, Legal Updates, and More.

New Video: Understanding MLM, Network Marketing Compensation Plans

Charity — Mon, 19 Nov 2018 17:12:15 +0000

MLM Compensation Plans: Maxtrix, Stair Step, Unilevel, and More – Watch the Video!

A Conversation with Jeff Babener Video Series: Learn about the difference between the various compensation plans and how distributors are compensated with each plan. It’s called multi-level marketing since distributors are compensated at each level as they recruit more consultants. How many levels are distributors compensated at? Learn about breakaway compensation plans. Learn the difference between sponsors and recruits. Get the definition of each unique compensation plan and which plans are most common and which are less successful. How many levels deep is it most common to go, and legal, to go?

When does a compensation plan become a lottery, which is considered legal by many states? Which programs have stood the test of time, and which have gone by the wayside? Which compensation plan should you choose so that your company is legal and stands the test of time? Learn how to ask the right questions to determine a legitimate operating MLM company vs. a pyramid scheme. Watch the video.

Keep yourself educated on the legal aspects of the MLM industry. Visit MLMLegal.com. Are you starting a MLM company? Make sure you have your legal aspects covered. Contact legal MLM expert Jeff Babener for your free legal consultation today.

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

Where Do You Go? Reporting an Illegal Pyramid Scheme – New Video!

Charity — Wed, 22 Aug 2018 15:24:21 +0000

Where Do You Go? Reporting an Illegal Pyramid Scheme

A Conversation with Jeff Babener Video Series: Know of an illegal pyramid scheme operating as a legitimate/legal MLM? Where do you go to report it? Are there regulatory agencies that accept reports of pyramid schemes? Trade associations, like the DSA, can help you determine if a company is legal or not. Check the Better Business Bureau. Do MLM companies have to register their company as a legal operation? Talk to other distributors in the company and in the industry. Does the company have competent legal representation? A startup without legal representation is not looking after their legal affairs. Watch the video.

For more information, visit mlmlegal.com.

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

New Video! Know the Signs: Pyramid or Legal MLM Company

Charity — Mon, 13 Aug 2018 15:22:10 +0000

Conversations with Jeff Babener: Know the Signs: Pyramid or Legal MLM Company

A Conversation with Jeff Babener Video Series: Educate yourself on the difference between a legal MLM company and a pyramid scheme. Learn the keywords, such as front-end loading. Distributors should not be required to buy thousands of dollars’ worth of product. Expect a reasonable presentation of the opportunity with no earnings hype. And have reasonable earnings expectations. No distributor should expect to make $10,000 a month. Watch the video.

To learn more, visit www.mlmlegal.com.

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

FTC Offers Guidance: Business Guidance Concerning Multi-Level Marketing

Charity — Fri, 06 Jul 2018 01:58:20 +0000

Do you have questions about multi-level marketing? The FTC staff has guidance to help members of the MLM industry apply core consumer protection principles to their business practices.

Multi-level marketing is a diverse and varied industry, employing many different structures and methods of selling.

Although there may be significant differences in how multi-level marketers sell their products or services, core consumer protection principles are applicable to every member of the industry. The Commission staff offers this non-binding guidance to assist multi-level marketers in applying those core principles to their business practices.

The FTC offers 18 common questions about MLM and running a direct selling business.

1. What is direct selling? What is multi-level marketing?

Direct selling is a blanket term that encompasses a variety of business forms premised on person-to-person selling in locations other than a retail establishment, such as social media platforms or the home of the salesperson or prospective customer.

Multi-level marketing is one form of direct selling. Generally, a multi-level marketer (MLM) distributes products or services through a network of salespeople who are not employees of the company and do not receive a salary or wage. Instead, members of the company’s salesforce usually are treated as independent contractors, who may earn income depending on their own revenues and expenses. Typically, the company does not directly recruit its salesforce, but relies upon its existing salespeople to recruit additional salespeople, which creates multiple levels of “distributors” or “participants” organized in “downlines.” A participant’s “downline” is the network of his or her recruits, and recruits of those recruits, and so on.

2. Under Section 5 of the FTC Act, what is an MLM with an unlawful compensation structure, which is sometimes called a pyramid scheme?

The most widely-cited description of an unlawful MLM structure appears in the FTC’s Koscot decision, which observed that such enterprises are “characterized by the payment by participants of money to the company in return for which they receive (1) the right to sell a product and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of the product to ultimate users.” In re Koscot Interplanetary, Inc., 86 F.T.C. 1106, 1181 (1975).1

1 This document is focused specifically on MLM practices that may violate the FTC Act. It does not address other types of unlawful structures that do not involve the right to sell a product or service, such as chain referral schemes (sometimes called “chain letters”) and Ponzi schemes.

3. How do MLMs with unfair or deceptive compensation structures harm consumers?

Distributors, how many consultants do you need to recruit to make $10,000? Watch the new video!

Charity — Sun, 01 Jul 2018 20:49:20 +0000

Will the stock market rise tomorrow? Who will win the Kentucky Derby? If one knew the answers these questions, he or she would be rich beyond imagination. How much one might earn in a compensation plan is subject to too many moving parts to make any sort of accurate prediction: the compensation plan itself, percentages paid on product, profit margins of product, personal sales, down line sales, the factors are endless. Two important resources are available that will give you a good place to start on this arithmetic: (1) leading companies post average earnings disclosure charts which indicate the average earnings for consultants at various levels and stages of their direct selling program; (2) many companies provide online earnings calculators which allow consultants to plug in their own assumptions on their personal and group sales and activity, which are then used to calculate the payout based on their expected sales performance. These aren’t fool-proof tools but they will give you realistic expectations on potential earned income.

It’s important to be honest with yourself as well. Very few consultants make it ‘big time’ in direct selling, and that is because sales is hard work, difficult work and many give up shortly after running through their warm market (friends and family). But if you’re the type that loves to sell to every person that you come across in your daily life then you may be a great candidate for a consultant who earns really high auxiliary income.

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.

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

Who Should You Consult Before Joining a MLM Company?

Charity — Sun, 10 Jun 2018 20:41:01 +0000

It is not required that you consult with any particular person prior to joining a network marketing company. However, it is a good idea to perform some due diligence. Check to see if the company has a good reputation online. Do a search to see if there is generally a good buzz surrounding the company and its operations. You can also check the DSA’s website to see if the company is a member. If the company is a member of the DSA then it abides by a code of ethics that are ethical industry wide.

Other to do items: Talk to others in the business. Talk to customers. Do a Google and Google News search. Do an online blog search. Watch YouTube videos. Look to websites such as www.mlmlegal.com that profile companies. Attend a businesspresentation. Do an internet search for review of the quality of the products.

Bottom line: Approach this decision as you would any other important decision, and do it with common sense.

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

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

The New FTC Direct Selling Guidance… Imperfect, But a Good Start – New Article

Charity — Mon, 29 Jan 2018 02:51:00 +0000

by Jeffrey A Babener
(First Published in World of Direct Selling)

Ring the bells that still can ring

Forget your perfect offering

There is a crack in everything

That’s how the light gets in

Leonard Cohen… Anthem

The new FTC Direct Selling Guidance arrived in January, 2018. It built on the goodwill dialogue between the FTC and the direct selling industry that was ushered in by a well-received DSA presentation of acting Chairperson Maureen Ohlhausen in November, 2017.

Was it helpful to the conversation on “personal use” and “pyramid?” Yes. Was it perfect? No. There are two major ambiguity flaws (likely inadvertent) in the Guidance that must be discussed. Are these “cracks” in this Faberge Egg? Yes, but, that’s how the light gets in.

1. Did the FTC recognize that this area should be governed by 40 years of case authority rather than FTC administrative fiat? Absolutely. Did it miss a major characteristic of this well established industry? Yes. Even in this friendly guidance, the FTC was tone deaf to the reward tracking model used by leading direct selling companies (including Amway, Mary Kay, Shaklee, Tupperware) for more than 50 years, and never questioned by the courts, that follows wholesalemovement of product with an underlying assumption that companies are capable of mandating, incentivizing and encouraging that product is accounted for: resold to ultimate users, personally used by distributors as ultimate users or returned under liberal one year buyback/refund programs. Should a successful half century model be upended…if the idea is to support an established industry, probably not.

2. The Guidance employs the term “driven by consumer demand” multiple times. The inadvertent implication is “driven by retail sales.” This semantic term is at odds with actual detailed Guidance discussion that concurs with the industry position that the pyramid test is “driven by sales to the ultimate user,” meaning that sales to distributors in reasonable amounts, for either personal use or resale, should be placed in the category of “sales to the ultimate user.” Perhaps the simple fix is a document global search and replace of “driven by consumer demand” with “driven by ultimate user demand.”

Is more FTC/Industry dialogue and adoption of H.R. 3409 (anti-pyramid bill) a good next step? For sure.

How we arrived at this dialogue…

The direct selling industry search for certainty in proposed H.R. 3409 has some real basis in the vacillating positions of the FTC. After the initial success of a MLM structure, by Amway, Mary Kay and Shaklee, in the 1950’s and 1960’s, the appearance of a true pyramid in Koscot and Dare to be Great, prompted the FTC to challenge the entire MLM concept, and specifically Amway, as being a pyramid. In 1979, an FTC administrative law judge rebuked the FTC, holding that Amway was a legitimate business opportunity, principally because it adopted what has come to be known, in all subsequent cases, as the Amway Safeguards:

Read the full article at MLMLegal.com.

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

Legally, are all Compensation Plans Viewed the Same?

Charity — Tue, 04 Jul 2017 19:17:56 +0000

Being in the MLM law business for over 30 years, we’ve been asked this question countless times. Direct selling business owners – especially MLM startup company owners – want to know which compensation plan structure will be the most supportive in the eyes of federal regulators. The answer is somewhat simpler than you’d imagine.

Whether your compensation plan is binary, matrix or an Australia 2-Up, and regardless whether your products are financial services, educational, health products, or vitamins, the answer is: The same legal principals apply no matter what your compensation plan is and no matter what your product is.

The questions you should be asking are “What is it that people are paying” and “Why are they paying it?” If you’re selling a quality product at a fair price to consumers then you are likely operating legitimately. If you’re running a program in which you are merely moving money or are selling overly-priced products to distributors who are buying into the compensation plan only to quality, then you probably have an illegitimate compensation plan structure.

State agencies and the FTC took a look at compensation plans and products in various spectrums. On a spectrum of compensation plans, a party plan that is retail-oriented is at the favorable end of the spectrum. As we move across the spectrum, binary plans, particularly binary plans that have distributors buy multiple business centers moves to the far end of the spectrum, nearer to the territory of being a pyramid.

Companies that are marketing different types of products are looked at differently in terms of “Live and Let Live.” At the conservative end of the spectrum, products that are used for daily household use, telecom, dietary supplements and vitamins – even if there is substantial personal use – state agencies understand that the product is being used and there is little to lose. At the other end of the spectrum, and one that involves intense scrutiny, are products that are high-ticket items, like financial seminars, financial education programs, consumer benefit programs, and particularly, things that are intangible; states look at these and they ask the question “Who is buying it and why?”

If you think you can operate a legal business selling prayers or wishes you’re dead wrong.

States want to know that retail sales are making it to the end-consumer (not just the distributor).

For more information on compensation plans, check out the article “How to Analyze Compensation Plans.”

Expert MLM Attorney, Jeff Babener, has put together a lot helpful videos on compensation plans. Here are just a few. Visit our main website, mlmlegal.com, for more information on all aspects of running a legitimate direct selling business.

How Do I Create a Compensation Plan That Guarantees That I Am Legal?

What Compensation Plans Do Distributors Generally Prefer?

Role of Compensation Plan in a Successful Direct Selling Company

Is the Compensation Plan the Driving Force of Success?

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

21 Ways to Provide Legal and Ethical MLM Training to Distributors

Charity — Sat, 17 Dec 2016 21:22:53 +0000

You can look at MLM companies from several perspectives to get an idea if they are running a legal business or a pyramid scheme. In this post, we cover how legal MLM companies approach training their distributors. Legal direct selling companies will encourage distributors to run their business with ethical standards and realistic expectations.

A good MLM company, seeking longevity in the marketplace, will put a lot of effort into training their distributors on how to manage and build their business. Businesses will provide online training, event training, and incentives.

Not every MLM company has the same opportunity, or compensation plan. There are many types of compensation plans and many variations on the original compensation plans (stairstep, unilevel, breakaway, matrix, binary). Each compensation plan and MLM company is unique in how it approaches consultant training.

Regardless of what compensation plan you’re using, there are common distributor training techniques among all companies and compensation plans. From a legal perspective, MLM companies must be realistic about their distributors’ statistics for success. It is not easy to become a MLM multimillionaire. Only a small percentage of distributors achieve such high success. Therefore, when legitimate direct selling companies present their training, management and support programs to encourage and train distributors they use some (or all) of the techniques in the list below.

If distributor training in your company sounds a little like this list, then it is likely looking good from a legal perspective. A MLM company opportunity should prioritize some or most of the following:

Enhance distributors’ self-image.
Enhance the image of the network marketing industry as a whole.
Educate distributors about the direct selling, MLM industry.
Create a realistic picture of what it takes to succeed in operating a network marketing business.
Help distributors understand the responsibility of being in business for themselves.
Make product education paramount in training programs.
Develop business management skills.
Help consultants understand the dynamics of people-interaction or person-to-person relationships.
Teach (or encourage the learning of) new business technology application to the business, such as computer software programs and website platforms.
Help distributors understand the basic concepts behind the network marketing method of distribution.
Create an appreciation of ethical standards.
Teach distributors how to run a small business, such as managing taxes, distributor networks and accounting.
Work on goal-setting and planning; develop one, two, and three plans, rather than promote unrealistic instant success schemes.
Develop the art of prospecting (finding and recruiting new distributors for your downline).
Help distributors understand the concept of commitment.
Learn to value the contribution of others in their home business.
Prepare to give effective presentations.
Learn how to deal with objections, rejections, and discouragement; helping distributors understand that an objection is nothing more than a question in disguise.
Develop an understanding of the legal issues impacting the network marketing industry and the individual distributor business owner.
Help distributors understand the art of duplication and the power of setting an example (in recruiting).
Help consultants understand that people are involved in network marketing for different reasons; allow those who are interested in the business opportunity to develop at their own pace and resist the urge to pressure satisfied consumers to engage in the business opportunity if they simply want to remain customers.

When MLM companies work to encourage their distributors to work hard, learn about the business, and have realistic expectations, then they are working to support a network of distributors that will last a long time.

If a direct selling company tells you that you’ll become a millionaire in a month then the chances are likely that they are not operating a legitimate business. Remember, if it’s too good to be true, then get out quick!

Would you like to learn more about distributor training, legal MLM compensation plans, or the MLM industry in general? Watch some of MLMLegal.com’s videos, presented by MLM Attorney, Jeff Babener. Visit MLMLegal.com for the most trusted MLM legal information on the web.

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

October 1st MLM News Global Newsletter by www.MLMLegal.com

Charity — Thu, 01 Oct 2015 18:53:07 +0000

What’s hot in this week’s news machine e-newsletter? This week’s articles focus on Vemma, the FTC, and the future of MLM – to mention a few – in the articles “Vemma vs. FTC: Guidance for the Direct Selling Industry – Welcome to the Future” and “The FTC Final Business Opportunity Rule: Still Work to do for MLM/Direct Selling/Network Marketing.”

Our huge newsletter subscriber list of MLM independent consultants will enjoy this week’s video that discusses ‘Do Incentives Increase Sales? How Worthwhile Are Consultant Incentives?’ Expert Business Consultant and MLM Attorney Jeff Babener answers this question. Do incentives help you increase your sales? Watch this video to find out and comment below!

The company profiled in this week’s newsletter is The Fuller Brush Company. With a celebrated history that reflects over a 100 years of excellence, the Fuller Brush Company is one of the iconic names in American business. Read more about this MLM company in this week’s newsletter archive.

Like all other weeks, there is the latest scam news as well. Check out the company names popping up on MLM scam alert sites:

What else is new in the direct selling industry this week? Check out all the top news stories that you are missing by not getting our newsletter in your inbox! Check out MLM News Global and sign up for our free e-newsletter! Cancel at any time. NO SPAM!

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.