Multi level marketing (MLM) is a form of business in which an individual sells products directly to consumers. It is a way to earn extra income by recruiting other people to join the business. In order to become a member of an MLM, one must first enroll in the business. After that, they need to earn commissions from sales. There are many different types of MLMs, each with their own unique structure.
While some MLM companies are scams, many have been deemed legitimate by the Federal Trade Commission. A well-established MLM operation has a long track record of legitimacy. According to the Direct Selling Association (DSA), there are more than 1,000 organizations using multi-level marketing in the United States. The World Federation of Direct Selling Associates reported in 2017 that there were approximately 116 million independent representatives in the world. However, only a small portion of these individuals earn a significant income.
Many families struggle financially when the dad’s income is not enough. They may also not be able to afford childcare or daycare. In such cases, the stay-at-home mom can use multi-level marketing as a way to earn a decent income while caring for her children. In addition to making extra money, she can also meet new friends through multi-level marketing. If you are a stay-at-home mom, this is a great opportunity for you.
Some people have a bad impression of multi-level marketing. In fact, the FTC has declared over 99 percent of new recruits lose money. However, the business models behind multi-level marketing are entirely legal, although the recruiting methods are often controversial. Sadly, some MLMs exploit the poor, the needy, and the youth. The marketing strategy is also centered around a mindset mentality and can be deceptive.
The FTC provides information about MLM scams. The agency has published information on a variety of subjects, including how to spot pyramid schemes and shady businesses. The FTC welcomes comments and questions on multi-level marketing. The author lives in Phoenix, Arizona, with her husband and two children. You can find her on Twitter, Facebook, and Twitter. If you have questions about multi-level marketing, please contact her.
The multi-level marketing business model is complicated, with many different kinds of business structures and methods of selling. However, core consumer protection principles apply to all these different forms of marketing. The staff of the Commission provides non-binding guidance for MLM businesses. This guidance is intended to help multi-level marketers adhere to the principles of consumer protection. In addition, MLM is considered a form of direct selling, which is based on person-to-person selling.
MLMs are often called pyramid schemes. While the FTC has yet to crack down on MLMs, it has looked into the structure as a whole and evaluated the claims and practices of a multi-level marketing business. The FTC states that a compensation structure based on “internal consumption” is not necessarily illegal. However, there are other factors that should be considered before deciding on whether an MLM is legitimate.