| Discerning network marketing businesses from scams |
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College students a prime target
When Nicholas Inabnit was 19, he answered an ad posted on campus at the University of Missouri, St. Louis. Inabnit says the ad promised a good hourly wage and/or commission for selling deluxe knife sets. Like many students, Inabnit signed up. It's a decision he came to regret.
"Here's the way it's supposed to work: You go to a person's house and do a product demonstration. You will be paid either commission from the sale or the base pay, whichever is greater," he says. Inabnit says the job's reality was a far cry from what was promised. Instead of making some decent part-time income, he often worked for virtually no pay.
In order to get the job, Inabnit coughed up a $150
fee and spent three unpaid days in training. After the formal training,
he says, he was encouraged to use high-pressure sales and to milk
friends, customers and family for sales leads.
The company, which is well-known on college campuses, has been the subject of more than one investigation by state attorneys general and the target of lawsuits. Additionally, college students around the country air their grievances on a Yahoo group site, dedicated to spreading the word.
"Most college students are desperate for money and on the surface it looks like they can make a lot," Inabnit says.
As for the knives, Inabnit says the quality was substandard,
especially considering that the sets sold from $200 to $2,000 apiece.
Consumer watchdogs
Quality and truth in advertising have concerned retired psychiatrist
Dr. Steve Barrett. Barrett, who runs the Web sites Quackwatch.org
and MLMwatch.org,
has dedicated much of the past several decades to crusading against
the sale of questionable health supplements. Network marketing frequently
figures into the sales strategies of these health supplements.
Barrett notes the government has shut down a number
of MLM schemes that sell bogus, and many times harmful, products,
but they continue to pop up. He pins his hopes on a proposed change
in the Federal
Trade Commission's rules that would more closely regulate MLMs,
including those that sell potentially harmful substances -- such
as diet aids and homeopathic remedies with no proven benefit.
The MLMs are fighting it. "MLMs are going to be in big trouble and they know it," Barrett says of the proposed rule.
Network marketing checklist
Savvy consumers don't count on Power Ball wins to fund their kids' college educations or provide retirement cushions. So why is it some cheerfully hand over big bucks on promises of unrealistic profits?
They want to believe it's true. If a bright and shiny MLM opportunity comes along, do a little digging before signing on. Here's what the FTC says you should know:
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Network marketing checklist |
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