Seller Beware-Evaluating Multi-Level Marketing Plans

Open up your Facebook feed and you will see how prevalent multi-level marketing (MLM) companies are among your friends and acquaintances. In a MLM plan, distributors sell products by word of mouth or direct sales and earn commissions for their sales and the sales made by people they recruit. Amway, Juice Plus, and Avon are just a few of the MLM companies that regularly pop up in my Facebook feed.

The allure is easy to see. Make money while staying home. Choose your hours. Be rewarded with fabulous trips and cash prices for meeting sales and recruiting milestones.

I have several friends who have found financial success and personal fulfillment with their respective MLM companies. They enjoy the work and are passionate about the products they are selling. Unfortunately, they are the exception. According to the Federal Trade Commission (FTC), only one in 100 MLM representatives make money.

Before you consider buying into a MLM plan, do your research. Not only could you lose your investment, you could be held liable if a person suffers an injury due to a product sold by you or if one of your recruits does not make as much money as you said they could earn (even if you were just repeating claims you read in the company brochure). Know what you are selling.

The Federal Trade Commission has a great article on what to look for in evaluating MLM plans, https://www.ftc.gov/tips-advice/business-center/guidance/multilevel-marketing.

For those of you who do decide to buy into a MLM plan, here is a great article on MLM success tips https://www.thebalance.com/multi-level-marketing-success-1794489.

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