FTC staff answers questions about MLMs

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Multi-level marketers sell a wide variety of products and services and they structure their companies in different ways. But there’s a lodestar that all industry members can use to navigate through issues that may arise – and here it is:  Core consumer protection principles apply to all MLMs. FTC staff has just released business guidance to help MLMs apply those core principles to their business practices.

The document addresses questions like:

  • How does the FTC distinguish between MLMs with lawful and unlawful compensation structures?
  • How does the FTC treat personal (or internal) consumption by participants in determining if an MLM’s compensation structure is unfair or deceptive?
  • How should an MLM approach representations to current and prospective participants?

Those are just some of the topics covered in the guidance document. Of course, the publication isn’t legally binding, but it offers FTC staff’s perspectives about issues we know are on the minds of industry members. Share the new Q&As with multi-level marketers.
 

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