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© 2011 MLMAttorney.com - Sponsored by Jeffrey Babener
The jury is in on this point. One only needs to look at Wall Street’s investments and acquisitions of MLM companies in recent years. It was Warren Buffet’s Berkshire Hathaway that invested hundreds of millions of dollars in acquiring Pampered Chef.
Wall Street made the owner of Excel Communication a mega millionaire when Excel’s Book of Business was purchased and the company made was public.
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The MLM Startup Conference is quickly approaching. Be sure to register for your seat at this educational event! More information is provided here.
MLM distributors often ask for a simple explanation of whether a network marketing company and its products are “for real”. Here is a simple test. Take the product and opportunity to your next door neighbor. Explain both of them to your neighbor. If you feel good about what you are doing; if you feel you are doing your neighbor a favor; if you can look your neighbor in the eyes as you explain the product and opportunity, then, congratulations, it is real. On the other hand, if you find yourself looking down at your shoes while you explain the value of the product and opportunity, it is time to look for another MLM company.
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No matter how you peel back the layers of the onion in determining whether you are selling a “good product,” the bottom line is that it must have inherent value to the potential buyer or recruit. It must stand on its own in the marketplace and it must be fairly priced. Take a look at MLM companies that have come and gone and you will see products that are merely an excuse for “moving money.”
Individuals do not buy the products because they want them, but rather because they are “buying into the deal” to qualify. The recent BurnLounge case is an example, where the court held that distributors bought the offerings to qualify in the business opportunity, not necessarily because they wanted the product. And even good products create pyramid schemes if they are overpriced. A one dollar “pen” may be a good product, but when sold for $10, the only purchasers will be distributors, who are then buying into a pyramid scheme.
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With all the legal issues occurring lately, and in particular with discussion of the BurnLounge case, people are asking about the importance of personal use by MLM distributors. Although it may be true that the MLM industry and regulators have not yet settled on the role of personal use as a proper attribute in determining a pyramid vs. a legal MLM company, there is no question, from a marketing standpoint, that network marketing distributors will find it difficult to recommend products and services to friends if they don’t use the products and services themselves.
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| Source: Jeffrey Babener Date: April 16, 2012 09:06 ET |
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MLMLegal.com Announces the Completion and Launch of the MLM Legal Cases ProjectOver 250 Federal and State Cases Related to the Direct Selling Industry are Free to View and Live at MLMLegal.com |
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| PORTLAND, Ore., April 16, 2012 (GLOBE NEWSWIRE) — Over 250 legal cases are available at www.mlmlegal.com. The legal cases are organized under their appropriate state or federal category. You can also find cases by searching under state and federal agencies or various categories. Each case has been painstakingly summarized; giving you a case synopsis, the legal issue involved, the court ruling, and its relevance to the MLM/Direct Sales/Direct Selling/Network Marketing/Party Plan/Multilevel Marketing industries.
To access the Legal Cases Project visit: http://www.mlmlegal.com/legal-cases/index.php.
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108th CONGRESS
1st Session
H. R. 1220
To prohibit pyramid promotional schemes, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
March 12, 2003
Mr. BARTON of Texas (for himself, Mr. HALL, Mr. FROST, Mrs. MYRICK, Mr. ENGLISH, Ms. PRYCE of Ohio, Mr. SESSIONS, Mr. TIBERI, and Mr. EHLERS) introduced the following bill; which was referred to the Committee on Energy and Commerce
A BILL
To prohibit pyramid promotional schemes, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Anti-Pyramid Promotional Scheme Act of 2003′.
SEC. 2. FINDINGS.
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All of which prompts the suggested action of the above mini-primer:
- In 2003, the industry introduced proposed federal clarification legislation, HR 1220 to recognize personal use and remove the disconnect and uncertainty; the industry, specifically the DSA, should again initiate such proposed federal legislation.
- In the alternative, the FTC and DSA, with permission of the BurnLounge defendants, should seek to amend the BurnLounge Final Order to recognize that “sales to the ultimate consumer” include distributor purchases in reasonable amounts for personal use.
And a great place to start would be the crafted language from the 1986 Herbalife case:
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FTC v. BurnLounge: 10 point mini-primer and action plan on the “personal use” issue:
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Overreach of BurnLounge Final Order creates uncertainty on “personal use” issue… FTC stated policy has been to prosecute egregious pyramid schemes as opposed to mainstream direct selling. By and large, this has been the case since the famous 1979 FTC Amway unsuccessful prosecution.
- FTC and major court pyramid decisions, including FTC v. BurnLounge, focus on front-loading, large investments, products and services that do not stand on their own in the marketplace, payment of recruitment commissions for purchases of nonconsumer items such as sales tools, unsubstantiated earnings claims and programs where the motivation for distributor product purchases is driven by intent to “buy in” and qualify for commissions in the business opportunity … and is incidental to a real desire for product or service for resale or personal use.
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What to look for:
1. A valid product or service that you believe in.
2. Company management with proven experience in network marketing
3. A compensation plan that provides a retail profit to the distributor and pays bonuses for developing a downline organization.
4. Top quality promotional and support materials.
5. Ongoing field training and support available throughout the country.
6. A sponsor that is willing to work with you and help you in your efforts.
Visit MLMLegal for more information.
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