Home Network Marketing - MLM Evaluating MLM Need Help Evaluating Network Marketing?

Need Help Evaluating Network Marketing?


Hard to believe, but it’s been a year since my post with the following information on evaluating Network Marketing. Far too many people sign up with companies before giving these types of questions much thought.


6 Questions for Evaluating MLM

1. Do you understand the compensation plan or is it confusing?

2. Would you buy the products for the retail price or are they too expensive?

3. Are the start up fees reasonable and is their value added to the start up?

4. Is the training included, or is training something you have to pay extra for?

5. Is the company using today’s technology or are they still meeting 2-3 times a week in hotels and conference centers?

6. How good is the company reputation?


1. Avoid any plan that offers commissions to recruit new distributors.

2. Beware of plans that ask you to spend money on costly inventory.

3. Be cautious of claims that you will make money by recruiting new members instead of on sales you make yourself.

4. Beware of promises about high profits or claims about "miracle" products.

5. Be cautious about references; they could be "shills" by the promoter.

6. Don’t pay money or sign contracts in a high-pressure situation.

7. Check out all offers with your local Better Business Bureau and state Attorney General.

The FTC on Multi-Level Marketing

1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.

2. Beware of plans that ask new distributors to purchase expensive inventory. These plans can collapse quickly — and also may be thinly-disguised pyramids.

3. Be cautious of plans that claim you will make money through continued growth of your "downline" — the commissions on sales made by new distributors you recruit — rather than through sales of products you make yourself.

4. Beware of plans that claim to sell miracle products or promise enormous earnings. Just because a promoter of a plan makes a claim doesn’t mean it’s true! Ask the promoter of the plan to substantiate claims with hard evidence.

5. Beware of shills — "decoy" references paid by a plan’s promoter to describe their fictional success in earning money through the plan.

6. Don’t pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or lawyer.

7. Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you’re considering — especially when the claims about the product or your potential earnings seem too good to be true.

Previous articleBuild Your Business with an Opt-In email List
Next articleFree Network Marketing Training – No Aftertaste
"Ty Tribble is an Internet entrepreneur, author and Work At Home Dad who lives in Seattle, Washington with his wife, Richelle and two children, Emma and Tyler. Ty has been featured in Entrepreneur and Success From Home magazine and is considered by many as the # 1 blogger in the world on the subject of Network Marketing. Author of the book, ‘Double Your Income with Network Marketing’, Ty teaches lead generation strategies through social media and blogging to tens of thousands of Network Marketers around the world."


  1. 6 Questions for Evaluating an MLM

    bMLM Blog: Do you understand the compensation plan or is it confusing? Would you buy the products for the retail price or are they too expensive? Are the start up fees reasonable and is their value added to the start…

  2. According to a letter from the FTC to Len Clements, the FTC only goes after companies when someone files a formal complaint against them. He says if the FTC shut down every company that violated the customer rule or the 70% rule, there would be no MLMs in existence.
    Passport nor the FTC will ever knock on my door to confirm my compliance with these rules which proves that they are looking only for violations of a blatantly deceptive nature. If this isn't the case, how can Amway/Quixtar still be in business? It appears that having the customer rule and 70% rule in the company policy goes a long way in keeping the FTC off the company's back.
    Passport is truly a rare company that doesn't fit the profile of a vast majority of companies in this industry. It's one of the safest companies I've ever seen.

  3. That letter than Clements touts as an "advisory opinion" from the FTC does not appear to be genuine. It's supposedly a letter from James Kohm to Neil Offen of the DSA dated January 14, 2004. However, the FTC's website includes all official and staff advisory opinions and you can search until you are blue in the face – you'll not find it there.

    Moreover, the letter claims that the FTC isn't concerned about multilevel marketing plans where the majority of the products are sold to distributors and specifically approves "buyers' clubs." Yet, in an actual, offical statement from the FTC, Kohm is quoted as saying:

    "In pyramids, the emphasis is on recruitment," says FTC attorney James Kohm, "and most, if not all, of the sales are to distributors."

    "The problem with pyramids," says Kohm, "is that the vast majority of participants must lose money to pay for the rewards of a lucky few. Most people end up with nothing to show for their investments except the expensive products or other marketing materials they're pressured to buy."



Please enter your comment!
Please enter your name here