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Gifting Club?… Run the Other Way…

Charity — Thu, 26 Sep 2013 20:18:20 +0000

All gifting clubs eventually die because they run out of people (and therefore cash) to continue to “feed” the pyramid.

A gifting club usually begins unintentionally between friends, family and neighbors. Unlike the traditional pyramid scheme, gifting clubs are not promoted as an investment by fraudulent financial advisers. Gifting clubs are usually home-grown. Those involved believe that they are genuinely helping one another. However, there is no exchange of merchandise and someone always ends up on the losing end.

Those who join usually do so by investing anywhere from $2,000 to $5,000 and then recruiting others to join. As more people join beneath them, their “investment” grows. Cash flow is passed from new recruits to those higher in the pyramid. Those at the top of the gifting club pyramid usually leave with roughly eight times the amount they originally invested, while those on the bottom lose their money as new recruits decline and cash ceases to drive the pyramid. All gifting clubs eventually die because they run out of people (and therefore cash) to continue to “feed” the pyramid.

Unfortunately, and to the surprise of the founders and participants, they are engaged in an unintentional cash pyramid headhunting recruitment scheme. Such practices violate consumer protection laws and criminal laws in most states. And, also unfortunately, the end game sometimes is a criminal prosecution for the participants, all of whom might be your next door neighbors and “great” people under most circumstances. Basic greed has blinded their judgment however, and the price to pay is often very “expensive.”

Additional information on gifting clubs is available at MLMLegal.com.

Visit www.mlmlegal.com and www.mlmattorney.com for more information.

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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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

MLM: Legitimacy through Statistics, Global Business Position, and Pyramid Schemes

Charity — Fri, 01 Feb 2013 18:00:33 +0000

This blog post is the companion post to the video Not all Direct Selling Companies are Pyramid Schemes.

There is clearly a middle ground between myth number one, which claims that there are no legitimate MLM companies, and myth number two, that claims that any pyramid scheme is free to do whatever it wants. The fact is that today the MLM industry is thriving. There are 16 million* people in the United States alone who are involved in network marketing. One in ten households has someone who is involved in a MLM opportunity.

We are a law firm that represents companies throughout the world. The companies that we represent are freely doing business throughout the United States – in every state – and around the world, while also respecting the particular rules in every place around the globe. For instance, China is currently and gradually allowing the phase-in of the direct selling business model. This will be magnificent to the direct selling industry and it will be a magnificent opportunity for millions of people around the planet.

Globally, today there are roughly 50 million people involved in direct selling part time. Some people work full time in network marketing. There are nearly 16 million people in the United States selling consumer products and services in the range of $30 billion and more than 90 billion people around the world are involved with MLM with sales exceeding $150 billion.

There is no question that the MLM industry is a thriving one. It is what the experts refer to as an “Ultraniche” industry. This is why network marketers and experts in the industry, such as myself, encourage people to be realistic about the MLM industry. We may impact the lives of millions of people. We may sell billions of dollars in products and services. However, many people don’t realize that direct selling represents less than 1% of retail sales in the marketplace. People that aren’t in the direct selling industry should keep that in mind. Network marketers play a vital role in the economy, but those who are involved in the industry should be realistic about the role that we play in broader world.

– Jeff Babener

*Note that the statistics in this post date from 2010-2012

For additional relevant information to this blog post, visit the following links:

Short Course on Network Marketing: Q&A with Jeffrey Babener on Pyramid Schemes Video

From a Legal Perspective: The Difference Between a Pyramid Scheme and Legitimate MLM Video

Factors that Make a MLM Company Successful Video

Why Choose the MLM Model for Your Business? – A CEO Interview Video

H ow to Tell if a Company is a Pyramid or a Legitimate MLM Video

T he Legal Issues of Starting and Running a MLM Company Video

Not all Direct Selling Companies are Pyramid Schemes Video

Debunking Direct Selling Industry Myths Video

Has Corporate America Discovered the MLM? Video

Should a MLM Company go International immediately? Video

Is the MLM Industry “for real” in the Business World? Video

Is This A Pyramid or a Legitimate MLM? Article

Identifying Illegal Pyramid Schemes Article

Your Time Is Now Article

Starting Your MLM Company: why They Work- Why They Fail Article

MLM Consulting: International – MLM International Market Entry: Practical Issues Article

The Right Place, The Right Time: The Emergence of Direct Selling [PDF] Article

Free MLM Startup Manual Article

SEC: We Hate Pyramids Article

MLM Law in 50 States Article

How To Build A Successful Direct Selling Company Article

Pyramid: Yes or No? Article

What Differentiates a Legitimate Direct Selling/Network Marketing Company from an Illegal Pyramid Scheme? Article

The Hallmarks of Legitimate Direct Selling/Network Marketing Companies Article

And the Leaves that are Green Turn to Brown – MLM Penny Auctions Article

MLM/Direct Selling/Network Marketing: Billions of Participants Make for a Veritable Industry Article

Make sure to visit our blogs for the latest information on the direct selling industry: MLMLegal Blog Home and MLM Attorney Blog Home. HINT: Chose a category to narrow your search for discussion topics!

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Twitter: http://www.twitter.com/BabenerLawFirm

Myspace: http://www.myspace.com/mlmlegal

Facebook: http://www.facebook.com/profile.php?id=696968133

And, as always, visit MLMLegal.com, the best MLM resource on the web.The next Starting and Running the Successful MLM Company Conference is quickly approaching! On February 21^st and 22^nd, 2013 we are hosting the MLM Conference for the 25^th year! This is now our 63nd annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. (Can’t make this event? Keep an eye out for our May and October conferences as well.)

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

An Introduction to Direct Selling and The Basics of MLM

Charity — Thu, 31 Jan 2013 19:58:00 +0000

This blog post is a companion post to the video: An Introduction to Direct Selling and The Basics of MLM

The Introduction of Expert MLM Attorney, Jeff Babener

Jeffrey Babener of Babener and Associates is a legal legend in network marketing for his representation of some of the biggest and best MLM companies in our industry, as well as for his contribution to the positive development of network marketing law.

His several books are viewed as cornerstones for understanding correct business practices in the direct selling industry. And, his quarterly seminars on how to launch and run an MLM company have served as the foundation for dozens of direct selling companies that have become network marketing success stories.

Mr. Jeffrey Babener, please introduce us to network marketing…

Mr. Jeff Babener: Unfortunately, we have many companies out there that are scams masquerading as legitimate multilevel marketing, direct selling companies. This has been a problem for the industry. There is often a fine line between legitimate and pyramid companies since the structure of all companies are in some pyramid format, but the courts and regulatory agencies have long established the difference between legitimate and illegitimate.

The bottom line is that we are looking for a product or a service that has a legitimate place in the consumer marketplace. When we look for a legitimate MLM company, we are looking for a variety of things. We’re looking for a product that is fairly priced and that gets used. We’re looking for a program that pays commissions only on products that are sold to the customer and are used. We are looking for a program that doesn’t involve inflated earnings claims or earnings exaggerations. We are particularly looking for a program that doesn’t involve high-cost investments or inventory loading.

We’re looking for programs that don’t involve overinflated pricing of products. We’re looking for programs that are intended for the long-run. And eventually, what is asked of the company by consumers, courts, regulatory agencies, etc. is if people are buying products or services from the company, what are they paying and why are they paying it?

If they are paying an exorbitant amount of money just to buy into the program and to qualify into what everyone refers to as “the deal,” it’s an illegitimate program. If they’re buying products and services because they want them, they intend to use them, and they have a market for them, then the business model probably will work. Always remember, there is always a fine line.

For more information on the difference between a legal and illegal direct selling, network marketing, MLM company, visit the following links:

Is This a Pyramid or a Legitimate MLM? Article

From a Legal Perspective: The Difference Between a Pyramid Scheme and Legitimate MLM Video

What Makes a Pyramid Scheme? Video

Not all Direct Selling Companies are Pyramid Schemes Video

Where can I find a legitimate direct selling company to join? Article

Identifying Illegal Pyramid Schemes Article

How to Tell if a Company is a Pyramid or a Legitimate MLM Video

Read our blog posts on relevant topics:

Interview with MLM Attorney On The Difference Between a Pyramid Scheme and Legitimate MLM

Are you Starting a MLM Company?

The Hallmarks of Legitimate Direct Selling/Network Marketing Companies