Got an panicked email just now from a gal who had a little group of prospects do a “180 degree turn away from doing this with me” because they read that “our company was named as an offender on this pyramid site.”
Here’s the link she sent, and here’s what her prospects had read:
“The FTC is adopting a new ‘rule,’ similar to the rule that covers franchising. The new rule covers businesses that sell ‘business opportunities.’ Multi-level marketing (MLM) is covered. This is the first time that MLM will be under any FTC ‘rules’ at all. This would cover Amway/Quixtar, Melaleuca, Arbonne, Nuskin, Life Without Debt, International Galleries, EZWealth, Market America, Pre-Paid Legal, Wellness International Network, BioPerformance, Usana, Nikken, and a host of others.
“This new rule focuses on financial ‘disclosure.’ A financial disclosure rule could curb the pervasive deception regarding income averages (MLM causes a net loss for nearly all recruits), odds of success (99% failure rates in MLMs), and the fact that almost nobody buys MLM goods other than the salespeople (the disguise of ‘direct selling’ used by pyramid recruitment schemes).”
No wonder they got scared off.
But you need not panic.
A dose of education and preparation is the best way to protect yourself and your babies against diatribes like this that have both truth and fiction in them. But which is truth and which is fiction?
#1. The FTC proposed rules are not official yet.
#2. The companies listed are not necessarily “offenders,” even though naming them gives that impression. They are merely some known network marketing companies that would be covered under the proposed new regs. So what?
That’s like saying, Bush is about to sign a new law on how individuals must now prepare their tax returns, followed by a list of people who are well-known. That would give the impression THIS LIST in particular are ‘bad’ but in fact, all tax paying Americans would be affected. Does that make everyone bad?
Duh.
#3. Even if the proposed FTC rules take affect, know this: if you bring people into the business who buy product to start, and you show them how to sell it to customers and build up a customer base, you will never get in trouble with any rational laws.
However, if you encourage people to buy bunches of product at sign-up, and encourage them to earn their money back by getting others to buy in with big orders too, and no one learns how to sell it to customers, you’ll have something to worry about.
Not just from the FTC, but from those folks who don’t want stuff in their garage and return it. Or friends who don’t invite you over for Christmas dinner anymore.
If you are getting just customers – people who are not reps, along with finding recruits to do the same thing, you need not worry about the accusation that “almost nobody buys MLM goods other than the salespeople” because that won’t be true for you.
As to the statement that most people don’t make it in NM, what else is new?
Now, how about they tell us something we don’t know?
P.S. Companies like Arbonne, for example already have income disclosure information on their websites. See this conversation with their #1 earner, Donna Johnson.
I agree Kim. Education is always the key. Can we look at the source of the information which you so graciously added the link to? It’s a discussion board!
And in reading the discussions I believe that this discussion is not advocating NWM and maybe they even have an axe to grind. So if we consider the source it’s certainly not factual or unbiased and maybe even just a little misleading? Therefore, any prospect that would read this post and decide not to get inolved was not a prospect in the first place but a person looking for an excuse not to do the business.
So relax as Kim says. This is a good thing. Don’t you want people in your business who are capable of independent thought?
Indeed, Craig.
People get scared often by such information, so I decided to expose it for what it is…a diatribe.
Still it comes from practices that some networkers still do today, and that’s why it’s worth commenting on.
People who don’t say the “five worst things” and who don’t front-load others, and who get long term customers, don’t have others creating diatribes against them.
Wish everyone in everyone’s downline had your attitude.
I created two authority sites that deal with this issue: whether an MLM opportunity is a pyramid selling scheme or not, and anti-MLM groups and discussion boards or lists and the risks they pose to people burned by abusive MLMers.
http://www.IsItaPyramid.com
http://www.MLMrescue.com
I think you’ll find them useful.
John
PS: Both are generic sites from The Profit Clinic.
The FTC has always been able to regulate the MLM Industry, via section 5 of the FTC, or misleading advertising.
The new business opportunity rule is valuable because of the list of deemed deceptive sales practice, presumably selected by the FTC because the practice work.
Now, if they would only add a private cause of action.