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Home » Marketing » Multilevel Marketing

FTC Consumer Alert

Source: www.ftc.gov
Topic: Multilevel Marketing

Sort Desciption: Multilevel or network marketing plans are a way of selling goods or services through distributors. ... Some multilevel marketing plans are legitimate. ...

Content Inside: FTC Consumer Alert The Bottom Line About Multilevel Marketing Plans Federal Trade Commission n Bureau of Consumer Protection n Office of Consumer and Business Education Multilevel or network marketing plans are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor youll receive commissions for your sales and those of the people you recruit to become distributors. These recruits sometimes are referred to as your downline. Some multilevel marketing plans are legitimate. However others are illegal pyramid schemes. In pyramids commissions are based on the number of distributors recruited. Most of the product sales are made to these distributors not to consumers in general. The underlying goods and services which vary from vitamins to car leases serve only to make the schemes look legitimate. Joining a pyramid is risky because the vast majority of participants lose money to pay for the rewards of a lucky few. Most people end up with nothing to show for their money except the expensive products or market- ing materials theyre pressured to buy. If youre thinking about joining what appears to be a legitimate multilevel marketing plan take time to learn about the plan. Whats the companys track record? What products does it sell? Does it sell products to the public-at-large? Does it have the evidence to back up the claims it makes about its product? Is the product competitively priced? Is it likely to appeal to a large customer base? How much is the investment to join the plan? Is there a minimum monthly sales commitment to earn a commission? Will you be required to recruit new distributors to earn your commission? Be skeptical if a distributor tells you that for the price of a start-up kit of inventory and sales literature and sometimes a commitment to sell a specific amount of the product or service each month youll be on the road to riches. Often consumers spend a lot of money to build ...

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