Multilevel Marketing: The Day Job That Doesn’t Pay
When then FTC Chairwoman Edith Ramirez took the stage at the Direct Selling Association’s Business & Policy Conference in Washington, D.C. in October 2016, she did not mince words when it came to the widespread use of inappropriate earnings claims as a means of recruitment in the MLM industry.
 
[M]ulti-level marketers should stop presenting business opportunities as a way for individuals to quit their jobs, earn thousands of dollars a month, make career-level income, or get rich because in reality, very few participants are likely to do that. Although it may be true that a very small percentage of participants do have success of this type, testimonials from these rare individuals are likely to be misleading because participants generally do not realize similar incomes.
 
More than a year later, it appears few if any of the DSA members in attendance that day took the warning to heart.
 
A TINA.org investigation found more than 97 percent of DSA member companies are (or have been) engaged in misleading marketing schemes that peddle false and unsubstantiated earnings claims trying to convince prospective distributors to join their MLM network. TINA.org’s probe examined the marketing of every DSA member company as of November 29, 2017 and found that 137 out of 140 misrepresented the amount of money participants are likely to earn — misrepresentations that cause real and substantial harm to consumers.
 
TINA.org’s findings not only constitute violations of FTC law, they also breach the DSA’s own Code of Ethics and in doing so contradict DSA President Joe Mariano’s public statements on the supposed higher standards of the code:
 
DSA enforces one of the most rigorous self-regulatory codes of ethics in business today, ensuring that direct selling companies not only follow the law, but in many cases exceed its requirements.
 
“All too often, consumers with limited capital are induced to part with their money by MLM promises of unlimited wealth that will never come to fruition,” said TINA.org’s Executive Director Bonnie Patten. “It’s time that the DSA and its membership were held accountable for these unsubstantiated income claims.”
 
As a result of these findings, the DSA, the DSA Code of Ethics Administrator, and each MLM company in TINA.org’s database have been notified of the problematic claims.
 
TINA.org investigation
 
Using the November 29, 2017 DSA membership list, TINA.org investigated every company on the roster and found that out of 140 member companies (which includes divisions of certain companies), 137 are making or have made misleading income representations. TINA.org has amassed more than 3,000 examples of companies and/or their distributors making inappropriate earnings claims on their websites and social media platforms. This, despite the fact that Mariano informed TINA.org just last year that:
 
Beginning in 2017, 100 percent of DSA member companies will undergo a mandatory ethics review to ensure compliance with our Code of Ethics, including in the areas of income and product claims.
 
The claims that TINA.org has compiled range from assurances of achieving financial freedom, to making unlimited income, to being able to quit your job and stay home with your children. And these income representations are not hard to find. For the majority of companies, one need look no further than their websites and social media pages. Other assertions of wealth can be found simply by googling the name of an MLM company and “millionaire,” or “financial freedom,” or “free car,” resulting in a plethora of websites and social media posts making false and deceptive claims. Such was the strategy that led to a number of TINA.org’s findings.
 
While most of the MLM databases on TINA.org contain a sampling of around 20 inappropriate income claims, four companies (Kyani, Nerium International, Reliv International, and Team National) have more than 100, Jeunesse Global has more than 80, and 25 companies have less than 10 (Aerus, Become International, Boisset Collection, Carico International, Compelling Creations, Dudley Beauty, Energetix, Flavon USA, Harmony Green America, HTE USA, John Amico Haircare Products, The Kirby Company, New Earth, Orenda International, RBC Life, Regal Ware, Rena Ware International, Rexair, Sanki Global, SAS Spurilla, Simply Said, SimplyFun, Tealightful, Tristar Enterprises and Zinzino). TINA.org did not find inappropriate income claims for three companies: Red Rock Traditions, WBC Group (which is affiliated with Origami Owl), and World Book.
 
 

 

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    User

    COMMENTS

    sujoy sen

    2 years ago

    These could be true for those who are pursuing unethical business process. I am not sure if AMWAY a leading multi level company follow such practices. Please confirm of I'm wrong.

    REPLY

    Tex

    In Reply to sujoy sen 2 years ago

    You're wrong. Do your part and forward the Oliver video link to everyone you know, except current Amway IBOs, and encourage them to do the same, and so on, à la network marketing/MLM. If you don't, then you're part of the problem.

    Amway has 2 major problems, and most MLMs have at least one of these issues:

    1. The products are overpriced, which makes them almost impossible to sell to customers and results in Amway being an illegal pyramid, according to the FTC and SEC websites and previous court decisions; and

    2. The Tool Scam is hidden profit for the top level distributors only, and the vast majority of distributors operate at a net loss as a result. This is RICO fraud.

    For recent examples, google “FTC” along with the following companies, one at a time: FHTM, BurnLounge, Zeek, TelexFree, Vemma, and Herbalife.

    Although there is no federal law defining pyramid schemes, the FTC has a long and successful track record of using its Section 5 law prohibiting “unfair and deceptive” business practices to go after MLM scams: https://www.ftc.gov/tips-advice/business-center/guidance/multilevel-marketing which states, in part, “Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s probably not. It could be a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

    Read about these and much more at www.StopTheAmwayToolScam.wordpress.com and www.AllMLMFacts.org, and email [email protected] if you want to help shut down Amway and other MLM scams.

    Watch this video about Amway and other MLM scams, then forward it to everyone you know, except for current IBOs, and encourage them to do the same. When enough people know, these scams will collapse:

    English version: https://www.youtube.com/watch?v=s6MwGeOm8iI

    Spanish version: https://www.youtube.com/watch?v=Cy-O4myeUzg

    You're wrong, Amway is the largest MLM scam on the planet.

    Be Wary of Freebies; the SBI Story
    Consumer goods companies, often, offer a free gift on specific products or services, to entice customers. Many buyers fall for the bait, especially if freebies are offered by well-known brands and companies. However, if the freebie is an insurance cover that is suddenly withdrawn, the abrupt withdrawal can have serious consequences. This is what happened to late Surisetti Venkata Rao of...
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  • MahaRERA evaluates complaints from home-buyers and rules against builders in four cases
    Home buyers Mukul and Teena Jain, Rajkumar and Rekha Bhatia, Rohini and Manoj Thalve, Prakash and Jyoti Sutar, Rajesh and Harsha Gada, Ashok and Indira Karanth, and Vishal Ambani lodged complaints with MahaRERA (Maharashtra Real Estate Regulatory Authority) that the developer, Kumar Builder Mumbai Realty Ltd had failed to give possession by 31 March 2015, and had put a revised date of December 13, 2019 while registering with MahaRERA. The home buyers sought interest on their investments, and compensation for delay in possession, according to a report in Times of India.
     
    Adjudicating officer and MahaRERA chairman Gautam Chatterjee asked the developer, Kumar Builder Mumbai Realty Pvt Ltd to advance its possession deadline from December 2019 to 15 September 2018 and said that the developer would be liable to pay interest if he fails to deliver possession by that date.
     
    In a separate case, Sujata Hendre had complained that Ekta Parksville Homes Pvt Ltd had failed to deliver possession of her apartment in Brooklyn in Ekta Parksville Phase II by June 15, 2015, and with the revised deadline of October 31, 2019, she did not wish to continue in the project, according to Times of India.
     
    Citing Rule 4(2) of Maharashtra Real Estate Rules which states that the possession date should be commensurate with the extent of development work pending, Chatterjee ruled that the developer should hand over possession for the apartment before July 2018 and directed that if he fails, he would be liable to pay interest.
     
    Two separate complaints came to MahaRERA from Sneha and Satish Parkar and Suresh Sohani against delayed possession by Nandraj Developers Pvt Ltd. The home buyers had complained that the developer had promised possession by 31 March 2014. Chatterjee of MahaRERA asked the developer to deliver possession by 31 January 2018, failing which they would be liable to pay interest. He also directed the developer to form and register the society, as more than 51% apartments had been sold. 
     
    Home buyer Jyotindra Kansara had claimed in his complaint that the developer, Adani Estates Private Limited, had failed to provide possession by May 2017, as was committed by them. The developer claimed that no specific date of possession was committed in the agreements, but he was committed to give possession by June 2018 as mentioned on MahaRERA website. Chatterjee directed the developer to hand over possession by 30 June 2018 along with occupancy certificate, failing which he would liable to pay interest.
     
  • User

    COMMENTS

    Ramesh I

    2 years ago

    The RERA law and its rules have been hugely diluted by most States, as much of the illicit income of politicians and corrupt officials is parked in real estate in India. There are many provisions in the law and the Rules which are heavily in favor of Real Estate Developers (REDs). E.g. who only 70% of amount paid by home-buyers should be in an escrow a/c ? Why not the entire 100%, so that the RED is forced to use it ONLY to develop the Project s/he's taken the money for ? Why have the REDs been allowed to defer tentative possession dates by many years while registering on-going projects with MahaRERA ?
    The RERA law and its Rules will not help home-buyers get their due from unscrupulous rogue REDs. The law & rules need to be amended to make it fair.

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