Information about Multi-Level-Marketing

If you are thinking of taking part in an Multi Level Marketing Business it is worth knowing the difference between the genuine business and the illegal pyramid and chain letter. I noticed the following description in one of the compuserve forums. It seems to describe the two very well:

Pyramids or Chain Letters are illegal.
Multi-Level-Marketing is legal - and many people make a lot of money at it.

Working an illegal pyramid plan - even if you personally don't mind that it's illegal - is also unlikely to be worthwhile anyway. For example, in the typical 'sell a report' chain letter, the names of the people to buy your reports from are generally just as bogus as the testimonials. The organizers just keep pumping these things out from Mail-boxes and collecting the $5 fees - no-one else ever makes any money at them.

So, if 'pyramids' are illegal, but MLM marketing plans aren't, what's the difference ?

Without getting technical, look at it this way - "Would real people, who have no interest in the business opportunity, buy this product, at this price?" If the answer is no, then the plan is a pyramid - sales are going to occur only to people in the opp, which is one of the clearest hallmarks of a pyramid scam.

If the product looks like it would sell, then look at the marketing plan. Can you make money by simply selling the product, or do you have to recruit to make any money? Certainly the benefit of multi-level-marketing is that you can always make MORE money by recruiting than merely by selling on your own, but if the potential income from *'just* selling is trivial, then the plan will favor recruitment over sales - not necessarily a sign of a scam, but a red flag.

Also, does the marketing plan pay you for recruits? This is clearly illegal. You can be paid for the sales that your recruits produce - indeed, this is the basis of MLM, but NOT just for recruiting them.

Finally, how long has the firm been in business? If it's been operating, openly, for a number of years, then it's probably perfectly legal. If it's a brand new start-up, it may also be perfectly legal, but without the test of time you need to do more due diligence. There are a - very - few MLM sales firms that have been in business for decades - Amway, Pre-Paid Legal, Watkins, and several more in the three years and up list - Excel, Usana, NuSkin, to name a few. There are also hundreds of new ones starting all the time - many of which are closed down almost as soon as they open.

Richard G. Alty
Independent Associate of Pre-Paid Legal Services Inc.
http://members.aol.com/ricky11452/pplsi.html
EMail : RAlty@lawyer4u.com

Many MLMs I have seen guarantee that you will make a lot of money and promise 1000s as soon as you start. Just send your cheque for $xxx. If it is so good, and there is no risk, then what do they need my $xxx for, why not just pay my commissions net of my subscription?!

If it sounds too good to be true - it probably is'

'If it is illegal - then you are probably going to be the victim'
this warning may have saved a few people who fell for one of the Nigerian scams. In essence the victim receives a letter asking for his bank account details so that money can be moved from one place to another. The result is that his bank account gets cleaned out by the crooks, or he need to pay a sum to cover 'expenses', or gets arrested and a large bribe is needed to be released. The victim is not likely to complain as he was well aware of the ilegality of the scheme at the outset. For a fuller description please see www.scambusters.com/NigerianFee.html

Do not pay any money for a promise of work - if you are working for someone they should be paying you!
In particular beware the envelope stuffing cons - these work on the basis that you send in a sum of money and get back a set of instructions on how to send out letters to get others to do the same.

Some ideas on how to make your web site pay
There are a host of legal and honest ways to make some money from your web site.

Make Your Site Sell Workshop
Having chosen what you are going to sell, this page explores various ways to achieve this aim

Merchants Beware! Fraud is Rampant
There has been a lot of emphasis in the media on consumer fraud but if you are a merchant than you are probably more at risk.

http://antifraud.com/
A front line of defence for online merchants. This site will have up to the minute lists of Email addresses used for fraudulent purchases and information provided by credit card processors and banks.

Internet fraud watch

Internet scambusters at http://www.scambusters.org/

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