February 19, 2009
For an MLM to be legal, must an actual, real product be being sold?
darren75431 asked:
I know what a “gifting” scheme is, and also a pyramid, but multi-level marketing is (or can be) a legitimate business model — but I am curious what defines the “product” that I believe it would be legally required to be selling. For example, I’ve seen many where what you buy is a very expensive set of books and tapes on self motivation and success, or a website to promote your business, or some other purchase that helps you duplicate the same effort that lead you to pay for it, so you can help others do the same thing…but that does NOT really relate to any other consumer use or purpose.
I know what a “gifting” scheme is, and also a pyramid, but multi-level marketing is (or can be) a legitimate business model — but I am curious what defines the “product” that I believe it would be legally required to be selling. For example, I’ve seen many where what you buy is a very expensive set of books and tapes on self motivation and success, or a website to promote your business, or some other purchase that helps you duplicate the same effort that lead you to pay for it, so you can help others do the same thing…but that does NOT really relate to any other consumer use or purpose.
Does this make it essentially a gifting matrix, but with a (greatly inflated) “product” being “sold”? And if so, I’m not saying I’m automatically opposed to that, but my question is: does that make it legal and acceptable? Thanks for any input…
Also, where do you research the ins and outs of such matters? Thanks!
Filed under Other - Advertising & Marketing by Susan
Comments on For an MLM to be legal, must an actual, real product be being sold? »
I would say no, I think sometimes the sale of a “Product” may actually be a more “Intangible Service”
i.e. - Wealth building, a diet, self-motivation, etc.
Of course, just because someone buys into the system doesn’t mean it will work. But that doesn’t make it illegal, just American.
Pre paid legal sales a service, Charles Givens sold wealth building strategies.
MLM get into trouble by misleading and promising finical freedom with little or no work.
The truth is there is a lot of lot of work with little or no monetary gain.
Darren,
A great example how to differentiate between the examples is to look at this article in wikipedia:
Hope this helps!
I may be able to assist further, just give me a shout.
BEST WISHES!