The agency is tasked to regulate companies for the protection of American consumers.
And since most global companies are headquartered in the U.S., they are compelled to follow the rules, or face being investigated and closed.
The Root of the Problem
Most people are lazy.
And most people hate selling.
But they all want to earn big money!
Honestly, our biggest market in MLM are those people looking for ways to not only earn extra income but also unlimited income.
As uplines, we recruit people to become distributors or members of our sales teams. This ensures our sales force is growing, and so our income.
Oftentimes, we’re recruiting the wrong people. But, to MLM companies, they are not that “wrong”. They can be a good source of revenue, too.
Wrong people like those who hate selling but wanting to earn big income can still be a good source of revenue for companies for the reason that if companies require them to buy in order to earn, they will.
That’s where the problem lies.
We can see pyramid organizations wherein revenue of the company the and the uplines are mostly coming from the internal consumption of existing members, rather than sales done to outside consumers or non-members.
You see that happen in majority of the companies, whether international or local in a particular country.
Less Retail Sales Scenario
Here in my country, the most popular compensation plan used by local companies is the “binary” or “dual team” plan.
Compared to the binary compensation plans used by U.S. based companies like USANA, the local binary here is focused on head hunting.
You recruit two people, one on your left team and one on your right, you earn X amount of money per recruited head, and then X amount of money for balancing the number of recruits in your two teams.
Most of the time, you can see uplines sit back and relax, do nothing and just watch their two recruited people go on recruiting others and making the organization grow in number down the line.
Here’s how income is generated:
Income from recruiting (pairing bonus)
Repeat purchase of those recruited
The income is generated from the people entering the organization, or from those who have entered and are continuously buying products…
The rallying slogan is this, “Join us! No selling required. Just invite consumers to become members!”
What is a Good MLM According To The FTC?
Honestly, I’m not present in that DSA meeting. It’s Atty. Kevin Thompson, an MLM lawyer, that was present in the meeting.
But I’m no new to this kind of thing.
I’ve been in this industry for more than a decade now, been on top and been on the bottom, and experienced both booms and busts.
Just like before, the FTC emphasizes on the importance of us doing retail sales to people who are not members of our company or organization.
I am the upline, I use my retail website or brochures to market to people outside the industry. I make retail income, my upline earns from me doing retail sales. If my downlines do the same, I also earn from them doing retail sales.
Multi-Level Marketing is a very good and lucrative business. It’s just that, if you are not careful in joining one, you might risk joining another company that’s soon to be shut down by the FTC. Or, if not shut down, banned from operating in the United Sates.
Wouldn’t it be great to abide by the rules, joining companies that are following the rules by the book, so you can focus on building your team and income hassle-free?