MLM Products are NOT Required?
This just in..Mlm products are not required to be purchased according to the mlm attorney Thomas Ritter. Recently published in his “Pay to Play” article about the mlm product purchase requirements out there, Thomas Ritter has opened our eye to what the law says….
All of these autoship programs and what not are NOT necessary?
Do you know what I’m talking about?
Out of all of the mlm compensation plans that I’ve reviewed on this mlm review blog, there are some that definitely stand out as having to be required to obtain what is called “Personal Volume”. (See the Mlm Glossary for more)
There is a handful that specifically state that this PV has to be purchased by the mlm associate themselves. According to Thomas Ritter’s comments, these mlms are in the red area and probably should rethink their payment plan.
If you’ve been in the network marketing arena for some time, you know that there are indeed mlms that require the purchase of their product. If they don’t require it within their mlm associate agreements, it’s heavily implied and almost certainly used as a source of social pressure within some mlm groups.
According to Thomas Ritter, Multilevel Marketing companies CANNOT require their consultants or participants to buy the mlm product as way to be allowed to be in the opportunity.
But wait a minute…if I recall, most mlm companies do allow you to have “some” success within the opportunity and then they hold off the higher earnings for you. Once you choose to purchase the product, the higher levels of earnings are opened up to you.
So this must be the loophole by which mlm companies are using to ensure the product and the “pyramids” continue to grow. (Not all mlms are scams, but there are many that ride the red line on this)
Now knowing that a mlm company can not require you to purchase their products to be involved in or participate in the mlm company opportunity should help you ensure that you are joining a strong mlm business opportunity. Make sure you look over the compensation plan thoroughly and be cognizant of the pressures you face when you join the mlm.
MLM Products Not Required – Is your MLM a SCAM?
According to the research done by busineesforhome, there are two elements which dictate whether or not a mlm is a scam or not.
- Whether or not the participant has to pay money in order to sell a product
- Whether or not the mlm consultant is able to receive rewards that are unrelated to the sale of the product
If a mlm company requires you to sell a product for a reward opens up a territory that most mlm companies want to avoid. They cannot require their distributors to buy inventory to participate. Doing so obviously sets the stage for people to promote the opportunity over the product itself and this is where mlms get themselves into hot water.
The Vemma Closing, which was in the news recently being accused as a fraud, was caused because they found that Vemma Consultants had to “Pay to Play”. …or so they thought. After a thorough investigation, it was found that Vemma didn’t actually require the Vemma Consultants to purchase anything or to pay fees in order to be consultants. That being said, the Court still found Vemma guilty of trying to manipulate the system so that Vemma Consultants thought they had and indeed did purchase the Vemma Products. Making the products appear essential is still requiring an action for the consultants to buy in order to be involved in the compensation plan. And that, according to the law, is a big no no.
The entire promotional material of Vemma was created in such a way that all affiliates who entered were highly pressured or made to believe that they had to buy a $600 Affiliate Starter Kit. The Kit itself was presented as the doorway to unlock earnings within the company.
Mlms are said to hide this type of practice from their consultants as a means to continually drive sales.
What intrigues me is that I was in Beachbody. In order to earn, I had to pay a monthly fee to do so. However, if you read the fine print, the monthly fee was associated with the “management” of a website. So this is slipped by the law. Then, I had a requirement to bring in two other people into the Beachbody Coaching Opportunity before I could even think of earning money ON TOP of a 99PV requirement.
How do they get away with this?
Well, the monthly fee is for the website. The 99PV I’m pretty sure is stated this way: “You have to get 99PV per month, but you can keep it for yourself for sell it to someone in order to reach this goal.”.
It’s a very very fine red line.
MLM Products – The MONTHLY Goals of MLMS
Mlms require monthly goals in order to reach certain levels of commission within the compensation plans.
Actually, the 98 Alive Review that I just completed was one of the first mlms that I have seen that specifically states a requirement “option”. Here is what is says: “ You must order 60 capsules of 98Alive or SELL $50 worth of product to yourself or others”.
There is a scapegoat. It’s the “to you or others” portion of their compensation plan.
This practice sets the stage for people to only be able to earn from the persons they bring in below them and again, is a slippery slope that mlms challenge all the time.
The reason the FTC bans the “Pay to Play” type practice is to avoid the pyramid schemes that inevitably come to the forefront because of this practice.
Bonuses should not be based on recruiting others but on selling the products.
If you find a mlm that does not allow you to earn commissions without paying for their product, then you have found one that is slipping between the slippery slopes for now. It may or may not ever be exposed and it truly depends on whether or not people report it.
Is that MLM a Scam?
Here are some things to consider when you are looking to see if a mlm is a scam:
- Do the participants of the mlm really want to buy and use the product?
- Do the participants promote the product for the income opportunity or the income opportunity because of the product?
If you are required to buy product in order to earn, your mlm is playing in the black hat world.
How to get rid of MLM Scams
A lot of mlms address the pyramid scheme accussations up front by ensuring that they do not have the purchase of the product as a requirement in order to earn. Many have something in their policies and disclaimers that exclusively state specifics about how you can earn. A lot “hide” it.
Here is what some MLMS are doing:
- Risking it and not changing their compensation plans until they are investigated.
- Implementing requirements that product purchase must come from outside customers (people who are not in the mlm opportunity)
- Allowing people to join the Opportunity without the required purchase of the product. (This is closer to Affiliate Marketing) So no more PV’s. (Probably the best idea)
So if you’re looking for a mlm opportunity?
I suggest making sure you don’t see the dreaded “PV” or “PSV” (Personal Sales Volume”) within the compensation plan. I suspect the more and more mlm companies will be adjusting their comp plans to make it more difficult to be seen as scams in the future.
If you suspect a mlm is a pyramid scheme, don’t join. It’s that simple.
Better yet, instead of mlm, why not train yourself to sell online as an affiliate marketer or lead generation specialist? (almost the same thing)
Learn the skills that teach you how to build a website and create income from it for yourself rather than selling into a mlm program.
I’m currently working to see how one newer mlm performs without having to buy the product up front. It will be interesting to bring you the results from a purely investigative perspective.
I would NEVER even attempt a mlm or anything to do with online marketing without first having website building and traffic acquiring skills.
Yup…you guessed it.
I learned it from something I promote.
It’s called the Job Killing Coaching Program.
You DO NOT:
- Have to Recruit
- Have to Buy Monthly Products
- Have to Have Home Parties
- Have to Stock Inventory
- Have to Have Office Hours
Sound like something you’d love?
Yeah….you know it does.
I don’t blame you for that.
Now you are sitting there reading in the same position I was last year.
What do you do next?
It’s more simple than you think.
If you TRULY desire change in your life, then you need to schedule a strategy call. Let’s see if you’re even a good fit for Job Killing. (Please…serious people only. We love time to make money, just as much as you probably want more money made on your own terms.)
Schedule a call by clicking on the “Schedule A Call” Banner below. It takes you to my neato calendar and you pick a day and time. If a time doesn’t suite you, hook up with me on Facebook and we can work something out.
I hope to see you on the inside!
Oh..and one more thing…tell Brad or Dan that Charissa sent you and you might find yourself with some extra help. (wink!)
Now if that makes sense and you want to join a great online opportunity in 2016, Make the call