Be wary of multilevel marketing

By NANCY PARADIS

© St. Petersburg Times, published April 27, 2000

From time to time, Action receives questions about multilevel marketing opportunities. It has been a while since we have addressed the subject, so here are Federal Trade Commission guidelines for consumers who are considering involvement in a multilevel marketing or distributor program.

Before signing up and parting with any money, make sure to get all the facts about the company, its officers and its business experience. Do not be pressured to sign up before you have the opportunity to review written sales literature and information on the company's marketing plan. Get references from other customers who are familiar with the company, its products and its services.

In multilevel marketing plans, also known as network or matrix marketing, goods or services are sold through distributors. Typically, distributors are paid commissions on both their own sales as well as the sales of distributors who have signed up under them, their "downline."

Earnings with companies generally are based on selling merchandise or services. Be wary of companies that pay commissions for recruiting others who, in turn, will recruit others. These may be illegal pyramid schemes.

Companies generally charge only modest start-up fees. Requests for large sums of money to become a distributor should raise a red flag.

Don't sign up at "opportunity" meetings, where not only high-pressure sales tactics but emotions run high. Give yourself time to review the company, its marketing plan and its service or products. Talk it over with a knowledgeable friend, family member, accountant or lawyer.

Be wary of "miracle" products, promises of high earnings or other inflated claims. Ask for evidence to substantiate these claims.

Beware of shills or "decoy" references, who are paid by a plan's promoter to fabricate stories of their financial success with the plan.

Run the company by your local Better Business Bureau, consumer protection agency and state attorney general.

We would like to add these reminders: If it sounds too good to be true, it probably is. This applies equally to the products or services being sold or the earnings potential. Also, if the offer to sign up is good today, it should be good tomorrow.

If you have a problem with a multilevel marketing plan, file a complaint with your local consumer protection agency, Better Business Bureau and the Federal Trade Commission. While the commission cannot become involved in individual disputes, it does look for patterns of possible violations to assist in its law enforcement efforts. Call (877) 382-4357 (FTC-HELP) or write to Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave. NW, Washington, DC 20580. Complaints may also be filed online at http://www.ftc.gov.

Flier miles arrive

Healthy Choice had an offer for frequent-flier miles on a number of airlines. On Sept. 3, I sent 20 universal price codes (UPCs) and cash register receipts and requested two 500-mile certificates for U.S. Airways. Instead, I received one 500-mile certificate for United.

I sent a post card on Oct. 23 about this error. Since I received no response, I wrote on Dec. 1 but got the same result.

I wrote again on Dec. 27. The offer ended on Dec. 31, however, and I know you have said that post office boxes generally close at the end of the promotion.

I ate 20 Healthy Choice meals (I like them but probably wouldn't have bought as many) to get the 1,000 miles on U.S. Airways. Instead, I got only 500 miles and for United, which I never fly. I would appreciate anything you can do. Margaret Mayer

Response: Your 1,000 U.S. Airways miles have arrived. Happy flying!

-- If you have a question for Action, or your attempts to resolve a consumer complaint have failed, write: Times Action, P.O. Box 1121, St. Petersburg, FL 33731, or call your Action number, 893-8171, or, outside of Pinellas, (800) 333-7505, ext. 8171, to leave a recorded request for Action. Names will not be omitted except in unusual circumstances. Letters may be edited for length and clarity.

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