Multi-level marketing: Questions to ask

Earlier today, we announced a settlement with Herbalife which gets $200 million back to consumers, prohibits the company from misleading people about how much money they can expect to make, and requires Herbalife to restructure its business practices so that rewards are based on actual sales of Herbalife’s products to real customers.

Each year, many people join multi-level marketing plans – and many also leave. Because your time and money are valuable, it pays to do some research in advance. If you’re thinking about joining any multi-level marketing company, here are a few things to consider:

  • Can you realistically see yourself selling to your friends and family, and other people you know?
  • If you’re born to sell, then ask yourself – what about this product? Will the people I know buy it once as a favor to me? Would they buy it repeatedly and consistently? For how long, and at what price?

Okay, that's the income side.  But what about the expense side of this business? What will it cost you to make those sales? Of course, there’s the cost of the product, but consider other stuff like gas, shipping and packaging costs, sales aids, trainings, your time, and so on. If the math doesn't add up, you know what to do. 

And if your sponsor tells you not to worry so much about selling because you can duplicate your efforts by recruiting others – walk away. Fast. In a legitimate multi-level marketing program, you make money by selling the product, not by recruiting others to join and buy product. That’s a near-guarantee that you’ll lose money. Remember: if you don’t think you can make money selling the product, others probably can’t either. 

If you spot a business “opportunity” that you think crosses the line, report it to the FTC.

Blog Topics: 
Jobs & Making Money

Comments

Since when is it okay for the Federal Goverment to micromanage the decisions of its citizens and cast doubt on an entire industry by sugggestive double speak? Why don't you help the public tremendously and shut down Big Pharma for killing 250,000 US citizens with toxic drugs taken as prescribed per the latest study in the BMJ?

Why don't you stop trying to avoid the truth by dragging BS about other businesses into the discussion?
The truth is that no one is micromanaging anything. The FTC protects the consumer from thieves, scammers and anyone who lies to take the consumer's money. You seem to be one of them.

Why does the FTC have a scam reporting and listing website for Ponzi scams like Strategy India ? That would be much better than turning individuals to become analysts.
It's simple , you need to detect and list Mlm who are ponzis like strategy india do on their website. Stop scams first and then aim at product Mlms .

So is the FTC going to go after other multilevel companies that have similar business plans like Amway, Usana or World Financial Group?

The FTC has already gone after quite a few. Some recently, some quite a while ago. You might check online before you ask.

I knew of a couple who sold Herbalife for about 5 years and they proved to me that earnings are possible based on sales of products which they stocked in one room of their home. There is another warning for anyone deciding on a multi-level business opportunity and it has to do with those who recruit you, read on:
The husband and wife both had day jobs and on weekends and three times per week were devoted to the Herbalife business while they were both conventionally employed. By the 5th year, they were earning an extra $3000 per month from their regular customer base, many of whom they delivered to or had come to their home and they were earning an extra $4000 or so per month from their recruits at which point, the wife of the pair and they decided she would do the Herbalife business on a more full time basis.
Fast forward to 6 or so months into her doing this on a full time basis while her husband was working and the wife of the couple who recruited them offers 'a new multi-level business opportunity' this time involving a new nutritional product with greater opportunity than the one they were successful with. They signed on with the wife of the couple who recruited them and, guess what happened next? The couple 'lost' their Herbalife distributorship because Herbalife at that time forbade any distributor from having other distributorships and ALL of their recruits and business was automatically transferred to their upline. Because the upline's distributorship was in the ownership of the husband who recruited this productive couple and not the wife who recruited them to the new business opportunity (which was in her name only) the obvious benefit in terms of knowing the downline's Herbalife business would automatically flow to them resulted in a lawsuit and she had to go back to full time employment that her prior employer graciously took her back. I do not think they won the suit because the distributor agreement for Herbalife at that time clearly stated their policy on the requirement that distributors were/are only allowed to be associated with Herbalife and to be found out as signing onto and operating a distributorship with any other company selling nutritional/products similar and competitive to theirs was grounds for loss of distributorship.
In closing, yes, money can be made if you can consistently sell product, but MLM businesses carry additional risks for those who do not carefully read and understand the legal document known as a distributorship agreement!

WB- YES!!! A thousand times, YES!!!

Federal Trade commissions pay of me the investment interest fee

I agree the big health issue is the affording to pay for service up front. I gave up my health benefit because I rarely use it but the reality is because many average income households like myself cannot afford it. I am someone who like taking full benefits from the tax payers because I paid mine all my life time. But it's very critical to remove those in control who simply enjoy taking people's money. Policies need to be enforce because where we are from, Asia seems to be the most business we see on island. But also at the same time politics also cannot be trusted to our opinion. Why because they can afford lavish lifestyles while good hard workers work even more harder.

Thank you FDA! Finally, some sense in this ethically-challenged business model. It's a legal pyramid scheme; perhaps you can work with the DOJ to get other MLMs to straighten up?

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