More Fair Network Marketing or Retail MLM Programs that Reward Direct Selling More than Recruitment
As explained in the "5 Red Flags" report (See "MLM Consumer Guides" page), MLM programs with compensation plans that emphasize recruitment in an endless chain of recruiting participants are called "recruiting MLM's". A few at the top of a pyramid of distributors are enriched at the expense of a multitude of downline recruits, over 99% of whom lose money.
Fair and equitable distribution of income in compensation plans is extremely rare in MLM/network marketing. Where such MLM programs exist, I call them "retail MLM's". In a retail MLM, every participant can earn a reasonable income for their efforts in selling products – without recruiting a large downline. Out of hundreds of MLM's I have reviewed, I have discovered only three MLM/network marketing programs that can possibly be classified as "retail MLM's," which ameliorate the harm by avoiding the worst abuses of the "5 Red Flags" discussed above:
Stampin'
Up! However, please note that
Stampin'Up executives (based in Utah) promoted legislation (SB 182) removing the
requirement for direct selling to legitimate customers in Utah's Pyramid Scheme
Act. In doing so, they did a great disservice to consumers world wide who are
affected by Utah-based schemes. Stampin'Up executives appear to have been duped
by the DSA, the lobbying organization which has been taken
over by MLM chain sellers and which has been deceptively lobbying to weaken
anti-pyramid statutes in state after state.
SPECIAL ALERT dated 10-02-06: We have since learned that Stampin' Up! (SU) was not duped at all, but apparently knew what they were doing all through the legislative proceedings. On July 1, 2006, when SB182 went into effect, SU introduced a new highly leveraged* compensation plan with great emphasis on recruiting over front line sales to non-participants in the scheme. Anyone who understands the issues will likely agree that SU can no longer be considered a "retail MLM."
These are not perfect, but since the bulk of commissions go to persons actually selling the products, they avoid some of the worst problems of recruiting MLM's.
There are a handful of other MLM's that come close to being legitimate retail MLM's, but they fall short by
(1) having more levels of distributors on one's upline (who are paid overrides or commissions on your sales) than are functionally justified (five or more individuals),
(2) the company's paying more in total commissions and overrides to the total upline than are paid to the person actually selling the products.
(3) "Channel stuffing;" i.e., requiring or strongly encouraging participants to buy more products from the company than they have orders in hand for resale, either up front or on a subscription bases. Stampin'Up, however, does have a substantial "pay to play" requirement.
(4) using complicated compensation plans that obfuscates the deceptions inherent in the program, so that neither consumers nor regulators can find the fraud, without the assistance of highly informed and sophisticated analysts, few of which exist for this type of fraud.
* Highly leveraged MLM programs reward a tiny percent of participants at the top of the hierarchy (pyramid) at the expense of those at the bottom
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PLEASE HELP! I believe this site presents information about MLM/network marketing that is as close to the truth as can be found. It can save you much time, money, and grief, as it has done for many others. And since law enforcement has essentially looked the other way on this type of consumer abuse, it is left to informed consumers to inform and warn their friends and relatives about the potential losses they could suffer from participation in a “recruiting MLM.” So please print and distribute at least 5 copies of the answer cards to those you care about – and ask each of them to share answer cards with 5 people, and each of them with 5 more, etc., etc. . . . In this way, you can influence many people for good – through an endless chain of truth-telling. Click here to see these great answer cards (4 to choose from) that you can print and distribute now – as well as carry with you for those awkward moments when you are recruited by a well-meaning friend or relative. For more information, click on the appropriate links above.