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Scam Alert: Multilevel Marketing Practices
Unfair and illegal multilevel marketing practices have become a concern on an international level for consumer authorities. Indeed, many consumers around the world have complained to econsumer.gov about marketing opportunities that turn out to be pyramid schemes or ponzi schemes.
Multilevel marketers use different methods of selling. Many of them are legitimate, but some are not. In multilevel marketing, individuals sell products to the public — often by word of mouth and direct sales. Typically, distributors earn commissions, not only for their own sales, but also for sales made by the people they recruit. Some multilevel marketing plans, however, do not comply with consumer protection principles and other laws. For example, if the money you make is based on the number of people you recruit and your sales to them, rather than sales to the public and the vast majority of participants lose money, the multilevel marketing plan could be an illegal scheme. If you’re considering buying into a multilevel marketing plan, you can ask questions to help you figure out whether or not the marketing opportunity is legitimate or an illegal scheme.
- Will your income will be based mainly on the number of people you recruit, and the money those new recruits pay to join the company?
- Does the marketer guarantee you will make a profit? Is there an intensive emphasis on earning huge amounts of money?
- Is the marketer using agresssive tactics to advertise the scheme such as “Once-in-a-lifetime opportunity” or making untruthful claims about the products it sells?
- Is the marketer concealing information about the company such as the compensation structure and potential expenses?
If you believe you’ve responded to an offer for an unlawful scheme, you can file a complaint with:
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econsumer.gov is an initiative of the International Consumer Protection and Enforcement Network.
