The MLM industry has, during the last 20 years, developed positive working relationships with regulatory agencies such as attorneys general and the FTC (Federal Trade Commission). There was a time, however, back in the 1970s, when the FTC challenged the legitimacy of the direct selling industry as being a pyramid scheme. They accused Amway of operating illegally and Amway prevailed in a very famous 1979 case [below] where it was held that the network marketing industry is a legitimate business model and the business opportunity is not a pyramid scheme.

No legal ruling has been more impactful on the direct sales industry than The Landmark Amway Case.

Afterwards, regulatory agencies and the industry went quiet until the 1990s when it was questioned whether or not product-using consultants were a legitimate end-destination for products or whether consultants were simply retail customers. There has been an ongoing tug of war between the MLM industry and the FTC in terms of determining whether or not personal use should have an impact on a company’s legitimate operations. The industry, with the cooperation of attorneys generals in more than a dozen states, were able to amend legislation in those states to recognize that personal use of product by distributors is a legitimate end-destination, just as if it were a retail sale.

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At the time of ordering by a distributor, don't order more inventory unless you have sold or personally used at least 70% of what you have previously ordered.

At the time of ordering by a distributor, don’t order more inventory unless you have sold or personally used at least 70% of what you have previously ordered.

The 70% rule derives from the 1979 FTC Amway decision in which an administrative law judge recognized that Amway’s 70% rule helped prevent inventory loading (it is not a retailing rule). Basically, the Amway rule provided: at the time of ordering by a distributor, don’t order more inventory unless you have sold or personally used at least 70% of what you have previously ordered. This is one of the Amway “safe harbor” rules that you will see in the policies of leading direct selling companies.

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Can you start a network marketing company on a low budget?

No one starts at the top and it is the rare company that starts with millions of dollars. It is not unusual to see network marketing startup companies spend hundreds of thousands of dollars; this just may not be possible for many with a dream. The fact is that many of today’s successful companies started at kitchen tables, in basements and garages, or even mixing their products in bathtubs. A look at Pampered Chef, Silpada, Longaberger, and even Amway will reveal very humble beginnings. It may take longer and perhaps the chances of success without proper capitalization are much lower, but it can be done. Small startups may emulate from company profiles found at www.mlmlegal.com; they may do their initial books and commissions with Quicken and they may do their printing at local fast print shops. Just hang in there. Financing is “good,” but passion and hard work can also compensate. As Neil Diamond said, “Money talks, but it can’t dance and it can’t walk.”

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What’s the difference between MLM, network marketing, party plan, and direct sales?

Actually, they all fall under the general umbrella of “direct sales.” Historically, direct selling only involved direct person-to-person sales, often door-to-door. In the 1950’s companies such as Amway, Shaklee and Mary Kay introduced to the direct seller the ability to sponsor other sellers, to build a sales organization, and to receive an override commission on the sales in their sales organization at multiple levels. This is the origin of MLM, multilevel marketing and network marketing, which are all the same thing; i.e., direct sales with a multiple-level

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According to an article at MSN’s website titled “Queen Elizabeth’s eating habits revealed,” former royal chef Darren McGrady states that Queen Elizabeth enjoys a bowl of cereal every morning topped with fruits or nuts from her garden, which are stored in one of the most popular direct selling products, Tupperware. Perhaps even the Queen of England owning and using Tupperware products shouldn’t be a surprise considering Tupperware was ranked the seventh largest direct selling company in 2010, with $2.3 billion in net sales.

As one of the largest MLM companies in the world, Tupperware operates in over 100 countries and has over two million salespeople. Tupperware’s top five consumers are Germany, America, Mexico, France, and Australia. The company itself was founded in 1945 by Earl Tupper and grew to be quite competitive with its “burping seal” technology.

The top ten largest global direct selling companies include 1) Avon Products, Inc., 2) Amway,

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People have always asked the question, “Is this industry for real?” “Is MLM a real option for individuals out there?” Keep in mind we have about 15-16 million people in the United States, and more than 60 million people around the world involved in MLM.  Statistics have indicated that perhaps one in ten households have somebody who is doing multi-level marketing part-time.  Again, 90 percent of the people who are in network marketing are looking for auxiliary income.  This isn’t the industry to be looking for a full-time job, although many people have been successful in that way.  What we noticed recently is a change in the industry.

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What MLM, direct selling, network marketing, party plan companies have the most name recognition out of Direct Selling News (DSN) list of the Top 100 Direct Selling Companies in the World? We’ve picked ten companies that we believe people in the MLM industry will most likely recognize in the United States. If you think we need to add or remove a company from this list, let us know by commenting on this thread!

We can’t imagine that anyone that hasn’t heard of Avon. Avon is our first pick because of their massive annual net sales in the billions and the fact that the company has been around since the 1800s. Not only are Americans today aware of Avon, but so were the generations before us. Avon has become symbolic of the direct selling industry. Here is Avon Products’ statistical information provided by DSN:

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Direct Selling News (DSN) recently posted the 2011 winners of the Bravo Awards. A round of applause goes to Amway, ViSalus and Nu Skin!

Doug DeVos, President of Amway, won the Bravo Leadership Award for putting people first. This includes Amway’s three million independent business owners. Direct Selling News offered the following statement as to why Amway and President DeVos were honored:

It is for this unwavering commitment to the people of Amway and his leadership role within the direct selling industry on the local, national and international levels, that Direct Selling News presented DeVos with the 2011 Bravo Leadership Award.

“Any time you’re recognized in your industry by your peers, it’s a tremendous honor,” says DeVos. “You want to be part of the team. So this is kind of like my teammates having a vote and saying ‘thanks’ in a very special way.”

ViSalus Science was honored with  the Bravo Growth Award. The founders were honored for saving the company from certain death. The DSN stated:

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