Many of us thinks that Multi-level marketing (MLM) (commonly known as network marketing) is illegal because of the income/portfolio that is being presented. But to tell you honestly, its legal. It is mostly compared to pyramiding which is the illegal ones because of the scheme that is made. This is an alternative way of advertising a company's product.
LEGALITY and LEGITIMACY
MLM businesses operate in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.
Because pyramiding (getting commissions from recruiting new members including "sign-up fees") is illegal in most states, to remain legitimate in the U.S. a company that uses multi-level marketing has to make sure commissions are earned only on sales of the company's products or services if they cross state boundaries. If participants are paid primarily from money received from new recruits, or if they are required to buy more product than they are likely to sell, then the company may be a pyramid scheme, which is illegal in most countries.
In a 2004 United States Federal Trade Commission (FTC) Staff Advisory letter to the Direct Selling Association states:
Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.
The FTC offers advice for potential MLM members to help them identify those which are likely to be pyramid schemes.
However there are people who hold that all MLMs are nothing more than pyramid schemes even if they are legal rendering the whole issue of a particular MLM being legal moot.
http://en.wikipedia.org/wiki/Multi-level_marketing#Legality_and_Legitimacy
Networking vs Pyramiding
* Networking have office while pyramiding do not.
* Networking have product while pyramiding do not.
* Networking is LEGAL while pyramiding is ILLEGAL.
Free advertising & marketing site at UseAds.com - Submit & add url & exchange text links + increase traffic & improve page rank!