Multi-Level Marketers Dodged a Bullet


How’s this for irony: Early last year the Federal Trade Commission enacted the new so-called Business Opportunity Rule that covered such business pitches as operating vending machines, jewelry display racks or making extra cash by working at home.

Notably absent from the definition of business opportunity: multi-level marketers, whose products are sold through a network of distributors (many of whom work at home) that get paid by selling products as well as recruiting other distributors.

You might say this is the ultimate in dodging a bullet, considering that multi-level marketers were a key target of the rule when it was originally proposed in 2006.

Multi-level marketing is a big business, but one critic says it’s also a big lie.

The rule would have required a number of onerous disclosures, including prior legal action against the company and earnings claims. In response, Herbalife, one of the largest publicly traded mutli-level marketers—which sells weight loss shakes and nutritional products—warned in its 2006 10-K, “The proposed rule, if implemented in its original form, would negatively impact our U.S. business.”

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