Quote:
Originally Posted by webexplorer
I think that MLM is a sort of a scam, and I assume that it is a legal for most states. Most businesses run a MLM. MLM stands for Multi-Level Marketing or network marketing. It is very common nowaday.
It usually charge you about 200 bucks to startup - i.e. books, many brochures for customers, and a video tape. This money split between you, your seller ("boss"), and the company. You make 1/3 (?) of profit and 2/3 goes to the company and the "boss" seller. The company and the "boss" seller make more money than you. If a new seller is under you, you will make more money than this seller, but the company double profit, etc...
One thing that I do not understand about IRS tax for this MLM. I used to work for a MLM a long time ago, and it was too expensive for me to buy something because some people cannot afford to buy it.
I am sure that both of Club Freedom and Quixtar are related to MLM businesses. I consider that it is a risk to work for the MLM because it could do anything happen if they shut you off or make you give it up in order to make more profit. That's my opinion.
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Yep!
If it was done through mail, then that would be mail fraud.
There is one old MLM done through mail that is considered illegal. What you do is have a program that's 4 pages long. Each page is worth $5. When you receive the original letter explaining how it works, it will contain 4 names and address on the bottom. Each person on the list has each page of the full program. The instructions are as follows...
1.) You mail $5 to each person on the list.
2.) You re-type the letter, but...
3.) Remove person & address from #4 on the list.
4.) Move person & address from #3 to #4, #2 to #3, and #1 to #2.
5.) Add your name and address as #1.
6.) Distribute copies of that new letter to others (family members, friends, co-workers, etc.).
Person #1 will send you the 1st page. Person #2 will send you the second page. Et cetra... Et cetra...
Now, you have all 4 pages ready to sell.
When people who have your letter mail $5 to each person on the list, you will be receiving the $5 and mailing out copies of the 1st page. When they follow the instructions, your name will be moved from #1 to #2. After they distribute their new letters and other people follow the instructions, you will receive $5 for the 2nd page. The whole cycle repeats until you are removed from the list as #4.
Let's say that the response rate is 10% and you send out the letter to 100 people, 10 people will participate.
10 people will pay you $5... earning you $50.
When those 10 people do the same thing, they will get 10 responses and you will get 100 responses... earning you $500.
When those 10 per 10 people do the same thing, they will get the 10 responses and you will get 1,000 responses... earning you $5,000.
When those 10 per 10 per 10 people do the same thing, they will ge the 10 responses and you will get 10,000 responses... earning you $50,000.
After that, you have earned a total of $55,550 and your name will have been removed from the list.
Of course, you would have had to spend approximately ($500 for copies, $500 for envelopes, $4,000 for stamps) $5,000 for materials. That leave you a profit of over $50,000.
They say that this MLM is legal because you are actually selling money-making materials and resources. However, the whole process lacks proper legal terms and is easily abused. So, it's considered illegal.