Ethics in business
3 quick ways to tell if your MLM is Illegal
by Andy Anderson Owner Yuma Bloggers
Andy Anderson 
Owner Yuma Bloggers
By the FTC and Unitied Nations convention on Internet fraud definitions over 90% of all MLM businesses are in fact pyramid schemes and not operated legally. The grounds are the following for being able to tell if your MLM is a scam instead of a legal program.
1. The product is of real or perceived value equal to or greater than the sale price. In short a $1.99 energy drink marked up to $7.99 to cover the pay plan is illegal.
2. Purchase of product must be optional and not mandatory if the minimum order amount of product is such that the member could never use as much product as received. Example: 1 popular fuel saver additive requires the purchase of 1 case of product per month, and consumption of the average motorist is 4 bottles per month used in there vehicles. This program is in violation of International law.
3. The pay plan is the sales pitch instead of product value and benefits. It is always illegal to sell the money making opportunity as the product and the product as a Oh you get this too. The product must be the front end of the business and the earnings opportunity optional.
When in doubt about a program, especially one with massive promises or a overly complicated pay plan, do one of the following.
1. Check your local laws to see if the business is operating legally where you live and where you plan to promote.
2. If you have not checked or still aren't sure neither join or promote until you know or you will be in the eyes of the law as guilty as the program owners if it turns out to be a fraud.
Thanks for all you do,
Andy
Oct 17th 2010 22:34
Owner Yuma BloggersBy the FTC and Unitied Nations convention on Internet fraud definitions over 90% of all MLM businesses are in fact pyramid schemes and not operated legally. The grounds are the following for being able to tell if your MLM is a scam instead of a legal program.
1. The product is of real or perceived value equal to or greater than the sale price. In short a $1.99 energy drink marked up to $7.99 to cover the pay plan is illegal.
2. Purchase of product must be optional and not mandatory if the minimum order amount of product is such that the member could never use as much product as received. Example: 1 popular fuel saver additive requires the purchase of 1 case of product per month, and consumption of the average motorist is 4 bottles per month used in there vehicles. This program is in violation of International law.
3. The pay plan is the sales pitch instead of product value and benefits. It is always illegal to sell the money making opportunity as the product and the product as a Oh you get this too. The product must be the front end of the business and the earnings opportunity optional.
When in doubt about a program, especially one with massive promises or a overly complicated pay plan, do one of the following.
1. Check your local laws to see if the business is operating legally where you live and where you plan to promote.
2. If you have not checked or still aren't sure neither join or promote until you know or you will be in the eyes of the law as guilty as the program owners if it turns out to be a fraud.
Thanks for all you do,
Andy
Oct 17th 2010 22:34
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Comments
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Andy Anderson
Owner Yuma BloggersYep the short version of the top 3 is. The product has to be of equal or greater value than the price. The product must be the focus not the opportunity, and you can not sell the opportunity to earn money as a product. These companies try to disguise their systems calling them Distributorships, and Franchise Businesses. A Franchise or distributorship bears a annual fee to us branding and gain materials and co-op advertising from a company. It may also require that you pay a profit percentage back per product ordered at BELOW RETAIL PRICE to maintain branding and marketing. Only the company profits from a franchise fee or distributorship and those licenses are not considered a retail product. With MLM they try to use the words but are not legal in selling the word as a license to sell others that title or set of rights. They are not legal selling you the right to buy at RETAIL PRICE OR ABOVE. They are not legal when offering franchise rights or a distributorship as a product. Thanks my friend and I hope you enjoyed my testimonial I left you. It's well deserved. Andy Oct 17th 2010 23:34 |
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Cheryl Baumgartner
 Medical Billing/Coding/InsuranceThank you, I did appreciate the testimonial. I only hope that somewhere out there our word fall on a willing ear. Oct 18th 2010 00:00 |
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Andy Anderson
Owner Yuma BloggersA 4 word comment was removed please leave comments that add value to be in the Apsense SPAM policy requirements. If all there is to say is great post or similar, click the link to top this post and the world of Apsense will know. Thanks folks, Andy Oct 18th 2010 00:50 |
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Gopakumar Rajan
 YouTuber from IndiaCongratulations for posting the article '3 quick ways to tell if your MLM is Illegal'. It is an eye opener for newbies as well as seasoned members. Thank you. Oct 18th 2010 01:14 |
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Cheryl Baumgartner
Medical Billing/Coding/Insurancejust start wearing out that report abuse button. Oct 18th 2010 07:15 |
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Dawie Bezuidenhout
Systems Engineer I.T.Hi Andy, good post like always. I linked my Blog about typical scams to here. Keep it up. Oct 18th 2010 17:48 |
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Bj aka Bill Brown
 Hosting and Backup Service providerThank you Andy for this information that I hope all members will read. They certainly need to. Oct 18th 2010 19:12 |
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Chuck Bartok
Veteran Entrepreneur now SharingAs always, useful information, Andy. Those Three points should be digest by all aspirants, but we must give credence to the many SOLID and Legal MLM opportunities I enjoy modest MLM income from Products that I would consume regardless the opportunity. The Income is derived from MY selling the value of the Product. And retention has been Very HIGH over the years, because the consumers are Not Chasing Rainbows, just enjoying Value! The downside of MLM income is the "worker bee" has no CONTROL of the Future of his Income. That is why we enjoy the Focus on REAL products, create for the Market Need Oct 18th 2010 20:18 |
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Louise Venison
 TE owner, affiliate marketerPeople focusing on the pay plan rather than the products is my biggest complaint when I see people advertising. Even when a company has a very good product (that a lot of people would buy regardless of whether there was a money making opportunity) I still see ads along the lines of "join now and you can make $10,000 by this time next week". What is it about people that makes them do this? It doesn't make any sense. Oct 24th 2010 05:28 |
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Bj aka Bill Brown
Hosting and Backup Service provider@Louise it is because they have been brain washed by the guru's and dont know any better - there is also the greed element that will draw people to the program only if they can make money. Oct 24th 2010 06:33 |
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Andy Anderson
Owner Yuma BloggersMost people looking at a home business, not all but most have at least one of these concerns. 1. They are under employed and having trouble making ends meet, maybe in debt and in need of money. 2. They are unemployed and looking in desperation for a means to make their life their own. 3. They are unhappy in their job and feel they could quit it at any moment but can't because of money and are looking to replace what they have or earn more. 4. They are retired and finding the fixed income and pension do not provide the life they have, wanted, or in some cases don't have any quality of life left because of finances. If any of the 4 cases persist as a motivation to get in, offering the cash desired can cloud the judgment. You need 5,000 a month to replay your $60,000 a year management jon you search for a way to make $5,000 a month and the $5,000, your target is what sticks out in your mind. That's human nature. Less than 10% of marketers start because we were entrepreneurial minded. Most don't start to have a business of their own, most start to get the money they need as the scammers of the world know this and write their sales pitch targeted at focusing your mind on the promise, not the reality. Oct 24th 2010 23:12 |
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Chuck Bartok
Veteran Entrepreneur now SharingFrom Andy: "Less than 10% of marketers start because we were entrepreneurial minded. Most don't start to have a business of their own" For the past 6 years my sole intent on the internet has been to share with aspirants the Requirements to build successful Businesses, regardless the Venue. It is amazing the On-line market just doesn't want to hear that. Yet I can pack a room, Off-line, conducting Small Business Creation Seminars, with Focus on Fundamental Business Practice, the huge commitment of Time and Energy and not necessarily Large capital outlay... In fact, many clients begin and grow their businesses with No Borrowed Capital Oct 25th 2010 12:15 |
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Muriel & Graham Legg
Make your website mobile friendlySome great info here, but I notice it is the converted that are posting. How does one get the message across to those that really need to know. Articles like this really need to be more widely read. Oct 25th 2010 15:31 |
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Louise Venison
TE owner, affiliate marketerJust because people aren't posting doesn't mean they're not reading. How many things do you read but not post because you don't have anything to add? I think if I didn't know this, I wouldn't have anything to say about it. I'd just be taking it away with me and thinking about it, and wondering whether to take any notice of it or not! Oct 25th 2010 15:37 |
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Andy Anderson
Owner Yuma Bloggers@The MGs Repeat the message everywhere when the chance presents, make that part of the success code you share for free, just like the money is in the list and traffic is the life blood of business, repeating these known facts will catch on and go viral. In the end the education we share repeating these things will create a wiser breed of new marketer less subjective to scams and fraud and that's great for our honest business systems. I don't share scam reports for example to reach the 25 who will curse my name for exposing them but to reach that 1 person who's life is impacted and while the result seems small it's larger than life. Before his death Cory Rudl told me he would rather have 5 well trained and open minded professionals than 5,000 of the average affiliate marketer because in 3 months or less he would be earning more with his group of 5 than the 5,000 combined. Thanks for making another great conversation folks, Andy Oct 25th 2010 16:20 |
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Paula van Dun
RetiredI stumbled on an other site that looks the same as all other profit share sites they have been warning for. It is called 5dollarmadness dot com Oct 28th 2010 06:02 |
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Bj aka Bill Brown
Hosting and Backup Service providerIt looks like a rip off being run using a hyip script. need to look at it more closely before making a statement that I would stand on. Oct 28th 2010 07:58 |
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Cheryl Baumgartner
Medical Billing/Coding/InsuranceWith the holiday I don't have time to look into your business but I will answer tour second question-YES! if you notice those of us who do not believe in spam have clickable signature lines which with take you to our business sites. Nov 25th 2010 13:05 |
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Bj aka Bill Brown
Hosting and Backup Service providerI personally find the site actually looks like a ponzie, there is only emphasis on earning from getting more people in. There are one or two small mentions of products but zero emphasis on it. The product is just bog standard hosting that can be got cheaper else where. There is a blatant lie on the page - it claims that with 2 members you are in profit - this is NOT true - read the small print, you pay $29.95 plus $2.55 AlertPay transaction fee = $32.50 so you are NOT in profit with $30 income. Now about you asking if its ok to use sig file to advertise. YES YES YES IF the site allows you to put urls in your sig file (check because some wont allow it) then make sure you do put yours in there. In APSense it is spamming to post a url as a comment BUT post a good quality post with your sig file set up correctly and you can have your link there under that line. Thats how we admins know is the link spam or sig file. AND YES we can tell if the line is faked so don't even think it you spammers reading this. Nov 25th 2010 13:06 |
Here's a biggie. Are you paid on the product or the recruit? While overriding and differential pay is fine if you are getting paid on the recruiting BIG red flag. Commissions need to come from product sales.
Oct 17th 2010 23:01