Multilevel Marketing

Multilevel marketing (MLM), also frequently known as network marketing and matrix marketing, is a nontraditional, dynamic, and highly controversial approach to product distribution. Essentially, MLM is a process of selling goods or services through distributors. MLM plans typically promise that a person who signs on as a distributor will receive commissions both for that person's own sales of the company's products and for the sales made by additional people recruited by that person to become distributors for the company. Multilevel marketing plans typically promise to pay commissions through two or more levels of recruits, a system that is known as the distributor's "downline."

The most controversial aspect of MLM, according to critics of the practice, is that the functioning of an MLM play appears quite similar to that of a pyramid scheme. A Federal Trade Commission (FTC) ruling in 1979, however, held that the largest of the MLM companies, Amway, was not a pyramid. This ruling was based on the fact that Amway distributors do not receive commissions for each new person they recruit as a distributor, but rather, receive commissions on any sales subsequently made by those recruits. In this same ruling, however, the FTC found that Amway was guilty of illegal misrepresentation of income to recruits and of price fixing.

More than seven million persons in the United States work as MLM distributors (sales persons). Critics continue to cite the u

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ed or processed foods we eat lack an ideal level of enzyme activity" needed for digestion. This statement is nonsense because the enzymes needed for digestion are made by the body's digestive organs. In 1993, the company and three of its distributors agreed to pay a total of $1,225,000 to settle FTC charges that they made unsubstantiated claims for Nutriol Hair Fitness Preparation and two skin-care products. In 1997, the company agreed to pay $1.5 million to settle charges that it had made unsubstantiated claims for five more of its products. The products, which contained chromium picolinate and L-carnitine were falsely claimed to reduce fat, increase metabolism, and preserve or build muscle. Sunrider Corporation, of Torrance, California, claims that its herbal concoctions can help "regenerate" the body. Although some ingredients can exert pharmacologic effects on the body, there is little evidence they can cure major diseases or that Sunrider distributors are qualified to advise people about how to use them properly. During the mid-1980s the FDA ordered Sunrider to stop making health claims for several of its products. In 1989 the company signed a consent agreement to pay $175,000 to the state of California and to stop r

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