I'm not sure exactly why, but as I examine the archives of Work From Home Momma, one of the posts that consistently gets the most page views is MLM: The Work From Home Myth.
Because it seems to be such a popular topic, I thought that I'd revisit the topic of multi-level marketing (MLM). I found a lot of information on MLM on the Federal Trade Commission's site.
According to the Federal Trade Commission (FTC), multi-level marketing plans use distributors to sell goods or services. The FTC document points out that some MLM plans are legitimate. However, a large number of MLM are not legitimate.
An illegal form of MLMs is the pyramid scheme. The term is defined on the U.S. Securities and Exchange Commission website. Here is the definition of a pyramid scheme.
The telltale sign of a pyramid scheme is that the main source of income for the organization is NOT from the product or service that it claims to sell, but rather from bonuses and commissions received on recruiting others into the program.
When investigating any type of business it's important to remember that if a claim sounds too good to be true it probably is. Before joining any sales organization be sure to do your homework and research any claims that the company makes.
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