MLM Myth #1

Myth: A network marketing company can require distributors to purchase a sales kit provided that it is offered to the distributor at company cost.

Truth: Approximately 10 state anti-pyramid laws permit a required distributor kit purchase at company cost, a few even allow a required sales material as long as the amount does not exceed a specified sum whether or not it’s at company cost. 40+ states do not have a permitted sales kit purchase at any price, nor does such an exception exist under the postal, business opportunity and securities laws (state or federal). There are a number of ways to have the new distributor almost always become a purchaser of a sales kit, but requiring its purchase isn’t one of them.

MLM Myth #2

Myth: It’s OK to charge a fee to become a distributor.

Truth: When you offer distributorships for a fee you are always selling an unregistered investment security under state and federal law, violating various state and federal lottery laws, and in most but not all states offering an illegal pyramid sales scheme when the distributorship has a downline commission structure.