MLM, Online Affiliate Programs, and What the Internet Gurus Are Not Telling You

MLM, Online Affiliate Programs, and What You are Not Hearing from the "Internet Gurus"

August, 2003 -- Picture this scenario. You're an independent distributor for a respected MLM ("multi-level marketing") company that works hard to operate within ethical and legal parameters. You've approached someone who loves your products and is looking to participate in a business opportunity. After spending a lot of time explaining the MLM compensation plan, policies and procedures, and answering questions, you look forward to hearing back from the person.

"Sorry, I'm not interested in your program anymore. I just got an email promotion about an Internet affiliate program selling software that pays on eight levels. All I have to do is to buy the software. Then I receive the right to sell the product and sponsor others as affiliates by directing them to a free website the company gives me. I can make easy money on those online affiliate sales!"

What's your retort? Do you state that because there is a mandatory product purchase upon which commissions are paid tied to receive the right to recruit, the program could be shut down as an illegal pyramid? Do you explain that when a company makes payouts on levels of independent distributors (whether they are called affiliates, marketers, associates, etc.) the firm is typically subject to all of the regulations affecting MLM companies?

Get the word out. Legitimate companies, distributors and consumers all suffer when illegal enterprises are allowed to flourish. Get yourself educated on the basic legal issues affecting your business.

Some corporate owners and/or managers carefully address the ethical and legal issues regarding their businesses. They have the right attorneys to guide them. They pay attention to the details. Others, however, do not take the time or spend the monies to check out this critical component of their businesses.

There are some who do not consciously want to evade the law. They just make false assumptions about what's legal and what isn't. Others have a low priority for ethical and legal concerns and it is blatantly reflected in their programs. Attorneys and consultants who have been involved in legal issues relative to MLM usually can spot these through their poorly designed compensation plans, policies and procedures, product labels, and sales support literature that put not just the company at legal risk but its distributors as well.

When you are educated about the legal issues affecting any program that could be construed as MLM, you can participate in a business opportunity, make sales, and sponsor people into your opportunity with a degree of confidence. Without educating yourself, you can't. You are making yourself and your downline sales force vulnerable to legal challenges. Many distributors are deluded into thinking that if there are problems, only the company itself will be attacked by regulators. This is not true. Distributors have had action initiated against them and regulators will continue to look at the activities of both the company and its distributors.

You can go to www.mlmcompensationplans.com to learn more about legal issues attached to MLM programs. Debbi A. Ballard, a well known MLM consultant and an expert witness in court cases, wrote "SIXTY Things You Should Know About MLM Compensation Plans" to help distributors learn about legal and marketing issues relative to these plans. (At that website, you can also sign up for a free e-newsletter that provides MLM news, legal updates, marketing strategies and more.)

The MLM compensation plan report can help prevent you from being lured into illegal business opportunity programs. If you are in an MLM program, the knowledge you gain can also help you to avoid losing prospective distributors to people who are tempted to get into some of those online affiliate programs that are illegal.

The Federal Trade Commission has already pursued online affiliate programs that had MLM compensation plans that the FTC charged did not adhere to various regulations. Legitimate MLM companies do have MLM compensation plans that fall within legal parameters. Online affiliate programs having such plans must do the same.

(Press Release provided by International Network Liaison Corporation. Email is inlcc@yahoo.com.)





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