Multi-Level Marketing Challenges - Pyramid and Endless Chain Objections

In this article, we take a look at claims made by several MLM industry "experts" who believe that most MLM/network marketing companies operate as endless chain or pyramid schemes. We wanted to look into this and see what is behind it. If true, does apply "carte blanche" to the MLM/network marketing industry or just some companies in particular?

In one particular example, Robert Fitzpatrick, author of "False Profits" has lately accused various companies of operating based on the "endless chain" recruiting vs. product sales mode, including Pre-Paid Legal, USANA, ACN and Herbalife. MlmWatchdog.com investigators have revealed that Fitzpatrick works closely with Barry Minkow's Fraud Discovery Institute, which has a history of short selling companies under their "investigations." So, is this just an example of stock manipulation, or is it truly investigative work? MlmWatchdog.com also points out that Minkow is a convicted felon who has served jail time for former fraudulent activities.

What does the law say about it? State law seems to govern activities in this area, although the FTC and SEC have had considerable involvement. In primary decisions, there have been a range of abuses targeted as possibly illegal:

1. Products with no "real world" marketplace
2. Products that are sold at inflated prices
3. Required purchases of company product
4. Plans which result in inventory loading distributors
5. Large cash investment upfront
6. Plans where products are totally or substantially used by distributors
7. Plans where fees are paid to distributors for headhunting
8. Plans in which commissions are not based on retail product sales
9. Plans which contain elements of a lottery; rewarding based on chance

State laws differ on key points, including, primarily, the question of whether distributor personal product usage counts as "retail sales." Three states have recognized personal distributor use as legitimate "retail sales:" Oklahoma, Texas and Louisiana.

When evaluating the bottom line whether a particular company meets legitimacy tests may be a down-to-earth question: Would you honestly buy the product if there was not an income opportunity attached? Keep in mind that your answer may be "colored" by a natural tendency to "justify" an emotional buying decision. If the answer is "yes," you've found a good company.

About the Author

Jim Green is an attraction marketing and network marketing expert with over 10 years in the industry. His attraction marketing system uses both internet and offline recruiting techniques to assist any marketer in consistently generating MLM leads.

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Multi Color Market Q&A

I have designed 12 prints in multi colour revolving around the word MUSIC?

I would like to put them into t shirt format and market them using the word Music and the acronyn I created and registered is there anyone out there would likes to gamble with this idea with me and profit from it. let me know done oct 6 2006

yes i would like to help

Have You Ever Been To Yard / Garage Sale ? If 'Yes', WhaT Stuffs Did You Buy There ?

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Or had You Been to The Flea Market? To Buy What?

Out of Curiosity, I had been to the Yard / Garage Sales to see what were there for sale but didn't buy any even though I was interested in some rare art-pieces.

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