What Is A Good MLM According To The FTC

What is a good MLM and what’s bad? We’re going to find out here in this blog post what’s a good MLM according to the FTC.

Just recently, the U.S. Federal Trade Commission has intensified its investigation of MLM companies operating in the USA that are reportedly doing bad on consumers.

The agency is tasked to regulate companies for the protection of American consumers.

FTC

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.

Pyramid Scheme

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.

It’s a healthy kind of business, right?

Watch this video…

Click here for the transcript of the speech.

Let’s repeat the 4 principles that determine whether an MLM business is legitimate:

  1. Legit MLMs focus on sales
  2. Legit MLMs must focus on sales that are profitable and verifiable.
  3. MLMs should not use thresholds or volumes that are met by personal purchases, distributors buying the rank qualifications.
  4. Compensation paid must be tied to RETAIL SALES.

Now, here’s the question: Is your MLM company right now encourages you to make sales to outside customers? Or, the big emphasis is on recruiting?

As far as I know, there are only few companies that focus on making retail sales.

One of them is Avon, but to an online MLMer like me, doing Avon sales is not my cup of tea.

Most of their products are cosmetics and underwear, and I don’t know a lot of people I can sell underwear to. lol

I have my choice of what’s good for me—an online company wherein I have so many choices of products to sell, and I can sell them using websites.

And a company that’s compliant with the wishes of the FTC.

Click here to learn more about this company.

Emphasis on Retail Sales

Conclusion

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?

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