Year after year hundreds of network marketing
programs, also known as multi-level marketing programs, are
promoted in Arkansas. Although some network marketing programs
are promoted and operated in accordance with Arkansas law,
many others constitute illegal get-rich-quick pyramid schemes.
How can the Arkansas consumer distinguish
a legitimate marketing opportunity from an illegal pyramid
scheme? Consider the following WARNINGS.
If the solicitation to join the marketing program includes
any of the characteristics listed in the WARNINGS below, BEWARE!
WARNING…WARNING…WARNING…WARNING |
POTENTIAL EARNINGS -
If the promoter solicits your participation in the program
by suggesting that you will make substantial earnings by
joining and recruiting, BEWARE! The promoter
should not represent that any income level is likely if
you join the program. The promoter should not promise potential
earnings for you based upon his earnings, or those of his
sponsor. If any representations are made as to potential
earnings, these should be the documented earnings of the
average participant in the program.
GROUND-FLOOR OPPORTUNITY -
If the promoter urges you to join now because the
program offers a "ground-floor opportunity" and it
is urgent that you enter immediately to take advantage of this
opportunity, BEWARE! Any program that offers
substantial income opportunities only to those persons who
become involved early in the promotion is, by its nature, an
illegal pyramid scheme. Any legitimate marketing program will
provide the same income opportunities to all participants,
no matter when the participant joins.
"GOVERNMENT APPROVED" -
If the promoter states or implies that an official
government agency has sponsored, approved or certified the
company, its marketing plan, agents, employees, representatives
or products, BEWARE! Neither the State of
Arkansas, nor the Attorney General’s Office, nor any
other government agency approves or certifies any network marketing
company, program, or product.
"IT’S JUST LIKE…" -
If the promoter represents that the company or the network
marketing plan is legal because it is similar to another,
better-known company’s marketing plan, BEWARE! The legality of any marketing plan is judged by its own
attributes, not the fact that the promoter compares it
to another plan. Additionally, statements that because
the sale of a product or service is associated with the
marketing plan the plan is not an illegal pyramid scheme
are not necessarily true. Even programs with legitimate
products can be marketed in such a fashion as to violate
the pyramid statute.
"JUST SIGN UP TWO" -
If the promoter represents that all you need to do to have
success in the program is to recruit a few participants
and help each of these recruit a few more participants, BEWARE! If the overall emphasis of the promotion is the recruitment
of other participants, as opposed to the sale of product
or services to non-participants, it is highly likely that
the program violates the pyramid law.
"BUY TO ENTER" -
If the promoter states, suggests, or implies that you must
purchase product in order to enter the marketing program,
or that the purchase of product will enhance your likelihood
for success in the marketing program, BEWARE! If the program requires the purchase of product, or the
payment of any substantial fee, in order to obtain the
marketing opportunity, it is likely that the program is
a pyramid. Additionally, if the program requires subsequent
payments or purchases in order to maintain or enhance the
marketing opportunity, it is likely that the program is
an illegal pyramid.
THE FINE PRINT -
If the promoter makes any representations which differ in
any fashion from the written promotional materials, BEWARE! All information regarding the marketing program should
be included in writing in the marketing agreement. Read
the agreement carefully before making a decision about
participating in the program. If anything the promoter
tells you is different from the written agreement, DON’T
JOIN.
The existence of any or all of the above
warnings in the program promotion could indicate a violation
of the Arkansas Deceptive Trade Practices Act. However, these
warnings are general in nature and may or may not apply to
any given network marketing program. If you are considering
joining a network marketing program, we suggest that you
have the program reviewed by private counsel of your choice
prior to joining.
Contact Us
Consumer Protection Division
501-682-2341
800-482-8982 (statewide)
501-682-8118 (fax)
consumer@ag.state.ar.us
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