This page was last updated on: November 23, 2009
MLM LAW AND HOW TO SPOT A SCAM
If it sounds Too Good to be true - it is!
Business Opportunties are 10X worse than MLM - Network Marketing on making income claims
Scams are a 100X worse the bigger the claim the more likely you are to lose your money - not make money!
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WHAT MAKES EARNINGS CLAIMS ILLEGAL?
FTC & Earnings Claims
National Dynamics
National Dynamics Corporation, et al, 85 F.T.C. 1052 (June 17, 1975)
Ed. Note: The FTC has a long history of disliking earnings claims in both Business Opportunities and MLM. Here is just a brief summary of the some of the history that allows them to hit your company for earnings claims. For those of you that don't know prior rulings in court cases have the Effect of Law! This is called "precedent law - ask your MLM Lawyer! The following is from the National Dynamics court case:
FTC (used in many court cases)
“should be allowed to make a wide variety of simple, truthful, non-deceptive statements concerning the earnings of their distributors. At the same time, they must be prevented from bandying about high earnings achieved by a minority of purchasers with no indication of the unrepresentativeness of such earnings. If respondents lack evidence that the high reported earnings of a few distributors are in fact representative of the earnings of large numbers of other distributors, then it is clearly deceptive for them to portray the minority results reported to them without a clear indication of their unrepresentativeness.” *
*The FTC also held that National Dynamics must maintain records which substantiate that any past or present sales, profits, or earnings represented are accurate. Where ranges of sales, profits, or earnings are represented, such records shall be sufficient to substantiate the number of purchasers achieving results within any stated range and the time period during which such results were achieved. Where average or median figures are represented, such records shall be sufficient to substantiate that such median or average figures are accurate.
States and Earnings Claims
Six states, Georgia, Maryland, Louisiana, Puerto Rico, and Wyoming have statutes that limit earnings claims made by any SALES company. These are either in DIRECT SALES laws or Business Opportunity laws. “Two states, Massachusetts and Wyoming, prohibit income representations.”
For more information buy the MLM Law book by Rod Cook
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