Legality of Multi Level Marketing

MLM (Multi-Level Marketing) is so popular today because of its simple pre-requisites like small start-up capital, no qualifications and the convenience of working from home. With the growing interest in MLM, many companies are supporting the MLM concept today.

Because of the wide choices available, your job of selecting an MLM company for yourself gets trickier. You need to carry on intense research to check the veracity of the promises made by the MLM companies. One such area to check is the legal adherence of the company. Due to the growing popularity of MLM as a vocation, illegal companies following illegal practices have also mushroomed. And generally they are able to fool a prospective client by projecting a very enticing and compelling reason to join.

To protect the rights of such innocent citizens, the World Federation of Direct Sales Association (WFDSA) has laid down some rules. WFDSA is an authority that has framed rules and regulations for their ethical compliance by the MLM companies. All Direct Selling Agents (DSAs), who are the members of this body pledge to abide by these World Codes of Conduct.

One illegal practice often pursued by many MLM companies is pyramiding. Under pyramiding, the companies do not pay you for sales, but rather pay you for each new distributor you enroll. Pyramid schemes are prohibited for the WFDSA members under the World Codes of Conduct.

WFDSA also provides guidelines for the people planning to take up MLM. These guidelines help you in picking the right MLM company, in further verification prior to associating with the chosen MLM company and in investigating about the existing clients of the company. Many legal counsels are also available globally to register a complaint against any unlawful practice adopted by any MLM company. But, you are protected by the WFDSA regulations when you join one of its members.

The United States Federal Trade Commission (FTC) has also put up a seven-point checklist to the benefit of all those people who are planning to adopt MLM. This checklist provides the areas that the prospect needs to check before taking any decision to associate with any MLM company.

You must verify the legality of the company’s products and selling practices not only as a member but as a buyer too. Basically, the key to pick a company both as a buyer and as a seller is it’s track record over a long period of time. Only a credible company will survive and excel over decades because honesty is the best policy.