The Federal Trade Commission (FTC), Better Business Bureau (BBB), and the United States Post Office (USPS) have investigated a number of multilevel marketing businesses.
The Better Business Bureau gives the following advice:
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Before investing, get all the facts about the company, its officers, its products. Find out the start-up cost, and the company's buy-back policy.
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Get written copies of the company's marketing plan and sales literature.
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Check with others who have experience with the company and its products. Are the products actually being sold to consumers?
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To check on a company, contact your local Better Business Bureau, district attorney or state attorney general's office.
The United States Postal Inspection Service advises:
"Fraudulent pyramid schemes typically violate the Postal Lottery Statute (Title 18, United States Code, Section 1302). They contain all three elements of a lottery: prize (expectation of monetary or other gain from participation in the pyramid); chance (the monetary return you may receive from your participation is entirely up to chance, that is, dependent on the efforts of those below you in the pyramid); and consideration (the fee you pay to become a distributor). Frequently, the entrance fee into the pyramid is very high. In many cases, the money spent for such an entrance fee can often be considered lost the moment you pay.
To protect yourself against falling victim to a multi-level marketing scheme, note whether the basis of the promotion is the sale of a product at the retail level, as opposed to an emphasis on recruiting more and more distributors to help you increase your income. "
Numerous consumer advocacy groups monitor and post information about scams. Check them out before signing any agreement. If there is high pressure to sign up, you don't want to be part of this organization. Typical come-on lines include sales pitches like "new opportunity, only taking the first 100 applicants" or "this price is good for today only." Walk away from these "deals." You will not regret it.
