I feel sympathy for all the people out there looking for work in this down-turned economy, in which case some people are drawn into employment opportunities to make money in their own business, such as Multi-level Marketing (MLM) or “Chain referral marketing” for an example.
I might suggest that if you feel that if any work-at-home job opportunity is too good to be true then it probably is--unless you have an unlimited supply of people to sell the products to or that you feel that you can risk your investment.
The controlling law in America is mixed when it involves recruiting distributors versus selling the product.
Below are some of the laws that I researched to help you. In any case, contact a lawyer if you have any questions. Many States differ about the Deceptive Business Practices Act, in which case I suggest you research the company by finding, contacting, and writing a complaint to all of the following links:
REMEMBER that without anyone reporting a fraudulent business practice allows people to take further advantage of people like you.
I would like to start with local and Federal laws that currently hold in our judicial system.
Each State has the Deceptive Practices Law concerning Multi-level marketing (MLM), or Chain referral sales, in which case my home State of Minnesota has the similar held law in State v. Solem, 301 Minn. 282; 222 N.W.2d 98; (Minn. 1974) –in which case the court noted that the statute only prohibited sales tactics that resulted in pyramid or multi-level distributorships.
However, the court of People ex rel. Hartigan v. Unimax, Inc., 168 Ill. App. 3d 718, 523 N.E.2d 26, 1988 Ill. App. LEXIS 375, 119 Ill. Dec. 558 (Ill. App. Ct. 1st Dist. 1988) stated its opinion that “Several courts interpret greater pressure on members to sponsor new recruits than to market company merchandise [***13] as evidence of an illegal pyramid.”
To counteract the latter opinion about the inherently fraudulent nature of pyramid sales schemes was recognized and discussed in People ex rel. Fahner v. Walsh (1984), 122 Ill. App. 3d 481, 486-87, 461 N.E.2d 78, 82-83:
"Pyramid programs * * * which induce a person to participate on the representation [***15] that he or she cannot only regain the purchase price, but also reap profits by selling the plan to others, are inherently deceptive and contrary to public policy. ( Twentieth Century Co. v. Quilling (1907), 130 Wis. 318, 324-25, 110 N.W. 174, 176; Kugler v. Koscot Interplanetary, Inc. (1972), 120 N.J. Super. 216, 232, 293 A.2d 682, 690-91; State by Lefkowitz v. ITM, Inc. (1966), 52 Misc. 2d 39, 275 N.Y.S.2d 303; In re Holiday Magic, Inc. (Oct. 15, 1974), 84 F.T.C. 748.)
The deception arises because the market eventually becomes saturated and the seemingly endless chain must end; consequently, many participants cannot even recoup their investments, let alone make a profit. ( State ex rel. Sanborn v. Koscot Interplanetary, Inc. (1973), 212 Kan. 668, 675-76, 512 P.2d 416, 423; Lefkowitz v. ITM, Inc. (1966), 52 Misc. 2d 39, 275 N.Y.S.2d 303; In re Holiday Magic, Inc. (Oct. 15, 1974), 84 F.T.C. 748.)"
The current judicial law interpreted, not legislative law based on intent, held in People v. Knop, 249 Ill. App. 3d 605, 619 N.E.2d 203, 1993 Ill. App. LEXIS 1309, 188 Ill. Dec. 839 (Ill. App. Ct. 2d Dist. 1993) affirmed the defendant's conviction for promoting a pyramid sales scheme, as there was sufficient evidence that supported a finding that persons paid for an opportunity to participate in a plan that was designed to generate profits through the growth of its customer base.
"Pyramid selling" as defined by the Federal Trade Commission involves "inventory loading" and "head hunting fees.” Companies which engage in pyramid selling have a large inventory requirement for a new distributor and reward distributors for bringing into the business a new distributor, unrelated to the sale of product. The result emphasizes recruiting of new distributors [**9] rather than selling the products to consumers. Typically, these companies require new recruits to buy $2,000 to $5,000 in inventory with as much as half of that amount going to the recruiting distributor. Such schemes are often characterized by the payment by participants of money to the company in return for which they receive (a) the right to sell the product and (b) the right to receive, in return for recruiting other participants into the program, rewards which are unrelated to the sale of the product to ultimate users.
The court opinion of State ex rel. Miller v. American Professional Marketing, Inc., 382 N.W.2d 117 (Iowa 1986) wrote the Federal Trade Commission took this view of subsection (b) when it stated:
“As is apparent, the presence of this second element, recruitment with rewards unrelated to product sales, is nothing more than an elaborate chain letter device in which individuals who pay a valuable consideration with the expectation of recouping it to some degree via recruitment are found to be disappointed.”
However, the expert witness for the defendant in this case states that direct selling plans and indicated that they are not pyramid distribution plans because:
(a) It has a professional management staff available to train and motivate distributors. Distributors are not charged for this service, nor are they required to take advantage of it.
(b) A new product representative does not pay for the right to sell; he pays only $30 for a sales kit, which includes two bottles of product and related literature (product information and sales aids). [*121]
(c) A product representative cannot sponsor (i.e., recruit) others. Hence, he does not buy the right to recruit, unrelated to selling product to ultimate users or consuming the product personally.
I add here the court’s opinion that--[(d) There isn’t inventory loading or position buying.]
I ask attorneys everywhere to ask—
(1) what level of income qualifies inventory loading when the most people preyed upon are lower-income individuals,
(2) when does selling inventory cross the line with recruiting others for residual income, and
(3) How much money qualifies under the protection of law under People v. Knop?
I found several great links to help your research to investigate if your proposed business is a legitimate MLM or what downfalls you might encounter--
· The Rip-Off Report—a public forum to report bad business practices and research.
· MLM watch-- an exceptional MLM FAQ's.
· How to start an MLM-- Guide on MLM and making it legal.
Below is a sample letter, in which you can follow, of my experience that I wrote concerning about my encounter with a possible MLM fraud occurring in New Brighton, Minnesota. I have not received a response so far from any authorities; of course, the names of people are changed to protect their identity—
There are FOUR pages total in this document.
AFFIDAVIT OF DECLARATION and COMPLAINT
I, "Brighan", under oath on the laws of perjury in the State of Minnesota allege that MAC Inc., Symmetry Inc., and its independent distributors at 2730 Highway 694, New Brighton, MN 55112 conduct an unlawful business of chain referral marketing to deceive reasonable people looking for employment in violation of MINN STAT §325F.69 Subd 1, 2 (1) (2) (a) for which I am out of $34.35.
RULE OF LAW
325F.69 UNLAWFUL PRACTICES.
Subdivision 1. Fraud, misrepresentation, deceptive practices. The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70.
Subd. 2. Referral and chain referral selling prohibited. (1) With respect to any sale or lease the seller or lessor may not give or offer a rebate or discount or otherwise pay or offer to pay value to the buyer or lessee as an inducement for a sale or lease in consideration of the buyer's or lessee's giving to the seller or lessor the names of prospective purchasers or lessees, or otherwise aiding the seller or lessor in making a sale or lease to another person, if the earning of the rebate, discount or other value is contingent upon the occurrence of an event subsequent to the time the buyer or lessee agrees to buy or lease.
(2) (a) With respect to any sale or lease, it shall be illegal for any seller or lessor to operate or attempt to operate any plans or operations for the disposal or distribution of property or franchise or both whereby a participant gives or agrees to give a valuable consideration for the chance to receive something of value for inducing one or more additional persons to give a valuable consideration in order to participate in the plan or operation, or for the chance to receive something of value when a person induced by the participant induces a new participant to give such valuable consideration including such plans known as chain referrals, pyramid sales, or multilevel sales distributorships. See State v. Thomas Arthur Solem, et al, 301 Minn.282; 222 N.W.2d 98 (Minn. 1974).
(b) The phrase "something of value" as used in paragraph (a) above, does not mean or include payment based upon sales made to persons who are not purchasing in order to participate in the prohibited plan or operation.
(3) If a buyer or lessee is induced by a violation of this subdivision to enter into a sale or lease, the agreement is unenforceable and the buyer or lessee has the option to rescind the agreement with the seller or lessor and, upon tendering the property received, or what remains of it, obtain full or in the case of remains, a proportional restitution of all sums paid, or retain the goods delivered and the benefit of any services performed without any further obligation to pay for them.
I would ask the Minnesota State Attorney General to research the following facts to protect the public:
1. I allege that Symmetry, Inc. is an international company who provides services, training, and nutritional products to people who become members and buy “starter kits.” One of the starter kits cost $163.00 in which it includes the $12.00 sign-up fee and Web site construction. To me, the main marketing strategy is to bring other people inside the organization to become “independent distributors” of Symmetry products on the premise of wealth building and financial independence.
In addition, independent distributors engage with their leaders to entice invitees to buy and “invest” money in Symmetry nutritional products for training, meetings, and residual profit sharing based on building organizations of people beneath them.
I believe that MAC, Inc., and Symmetry, Inc., run on the false belief that they can escape from any liability from their quasi-employees’ or “Independent distributors” illegal actions at MAC, Inc., 2730 Highway 694, New Brighton, MN. See State v. Thomas Arthur Solem, et al, 301 Minn.282; 222 N.W.2d 98 (Minn. 1974).
2. On July 9, 2008, a woman named “Grace” gave my girlfriend Deb a phone number for me to call her for a job opportunity at (651) 642-1264.
Deb told "Grace" that I am legal student looking for employment. “Grace” told Deb she could contact me about a job where I do not have to worry about having a babysitter. Deb came home and directed me to call “Grace” about a job.
3. I called “Grace” to schedule an interview, in which she told me that she heard from Deb that I like to help people and that I could work part-time until I can settle myself into something. I asked “Grace” what the job is, but she hesitated to answer any questions so I could research the company where she works. “Grace” only said to come to 2730 Highway 694, New Brighton, MN 55112 for an individual meeting with her tomorrow. Grace only told me the name of the company is “MAC.”
4. On July 10, 2008, I arrived at MAC, Inc., for the scheduled interview with other people who I believed to be job applicants. The MAC, Inc., representatives directed the applicants to take a seat in a presentation room that contained a white board, a large screen TV, and a table off to the right displaying Symmetry nutritional products.
5. At 1:00 PM, the “six-figure leader” gave a two-hour long sales pitch on the promise of help, training, and organization building for investing in Symmetry nutritional products. The speaker gave a PowerPoint presentation where it showed the invitees the company belongs to the Better Business Bureau and the Direct Marketing Association.
The presentation consisted of two videos, one video depicting the Symmetry product named Genesis©, and the other video showing images of wealthy people living a wealthier lifestyle with personal testimony about selling Symmetry products.
6. The presentation speaker asked the invitees if they like to live in a better house, have a better car, and a better life. The presentation speaker than pitched the three different retail packages available to sell once the person joins with a $12.00 sign up fee, in which I believe to be illegal as a franchise fee. Banbury v. Omnitrition Int’l, 533 N.W.2d 876 (Minn. App. 1995).
In addition, the sales pitch also promoted the “Seeds of Success” seminar in Chicago on the weekend of July 27, 2008 for an extra $300.00, in which case I saw two people write out a check for the seminar.
7. Once the presentation finished, “Grace” took my resume even though by now I felt wary of a dubious business. “Grace” took me aside for a one-on-one discussion about signing me up as an independent distributor for Symmetry and MAC, Inc. I balked at the idea that I should give any money for a job opportunity, especially when I do not have any money.
8. “Grace” called over “Dave” who I believed to be her senior representative who then introduced himself and asked me about my financial concerns. I told the both of them that I cannot afford to invest in any adventure that requires money. “Dave” kept up the sales pressure on me to ask my girlfriend for the money or use credit cards. He then offered me to buy two “best-selling nutritional products” for $70.00 to start my business.
"Dave” stated, “He and “Grace” would help me build the business as an independent distributor because if I sell their products then “Grace” will get paid and he will get paid” [with residual profits]. I told “Dave” and “Grace’ that I would try to come up with the $163.00 for the starter package that contains the personal Web site.
9. Before I left the meeting, “Grace” gave me a DVD titled Imagine produced by Symmetry Inc., and some fact sheets about their nutritional products (attached). “Grace” told me to take the video home and watch it to see how my life can change for the better. I asked “Grace” how much money she made since she began three months earlier, in which case she evaded the answer with “I wouldn’t be here wasting my time if it wasn’t worth it. I’ll spend my time with my nine-year-old instead if it wasn’t worth it because my time is worth money.”
10. I watched the DVD supplied by “Grace,” in which case the second title in the menu—Imagine a Better Life—retells the same message from the group presentation. The video underlines the message of building personal wealth through investing and organization building to sell nutritional supplements. The disclaimer at the end of the DVD and the group presentation reinforces my belief that MAC, Inc., and Symmetry, Inc., violate MINN STAT §325F.69 Subd 1, 2 (1) (2) (a) with chain referral marketing.
11. In my research, I have found similar complaints about Mac Inc., Symmetry Inc., and its affiliates on the Web site-- Rip-off report, in which I included the following link of complaints similar to what I have met http://www.ripoffreport.com/searchresults.asp?q1=ALL&q2=&q3=&q4=&q5=&q7=&q6=MAC%20-%20Symmetry&searchtype=0 .
12. On July 11, 2008, I called the Minnesota Better Business Bureau to confirm that MAC, Inc. belonged to the organization, in which case the BBB had no record of membership for either MAC, Inc or Symmetry Inc.
13. On July 11, 2008, I called the Minnesota Secretary of State to confirm that MAC, Inc is a registered business in the State of Minnesota. The Secretary of State told me there is no business listed under that name, in which I replied there is evidence that MAC, Inc had ran their business for a few years already in New Brighton, MN.
The Minnesota Secretary of State office said they are sending me a complaint form in the mail.
14. In addition, I believe that MAC, Inc., and Symmetry, Inc., also violate the Uniform Commercial Codes of employee versus contractor status for withholding taxes in their business organization—AFM Messenger Service, Inc. v. The Department of Employment Security. 198 III.2d 380, 763 N.E.2d 272, 261 III. Dec. 302 (2001).
I have wasted automobile fuel, four hours of my time, and I owe the baby-sitter for going on a fake job interview.
Here, MINN STAT §325F.69 Subd 1, 2 (1) (2) (a) held in State v. Thomas Arthur Solem, et al, 301 Minn.282, 222 N.W.2d 98 (Minn. 1974) is the controlling law and I believe the Minnesota State Attorneys Office and other government agencies must act to conduct a thorough investigation of MAC, Inc. The State of Minnesota could expose and shut down MAC, Inc., and Symmetry Inc, from using deceitful business practices of chain referral marketing.
I believe that both, MAC, Inc., and Symmetry, Inc., lure reasonable people into an implied employment opportunity disguised as chain referral sales, in which it produces greater residual income to senior representatives.
The crime here is deceiving reasonable people through recruiting on the premise of employment for “helping others,” in which case I believe that many unsuspecting people help build wealth and financial independence for their senior distributors with recruitment and product sales.
In addition, I believe that MAC, Inc., and Symmetry, Inc violate UCC business tax codes, in which case unwary Minnesota citizens are prone to further victimization.
I, "Brighan", state the facts in this declaration are true to the best of my knowledge under the law of perjury in the State of Minnesota.
|Notary Stamp or Seal Notarized at Rosemount Nat’l Bank 1351 Arcade St. St. Paul, MN 55106|
I have signed in the presence of a Notary or witness on July 14, 2008. /s/______________________________ "Brighan", paralegal.
If you like more information about chain letters and other frauds, please follow the link to Soulight's aidpage.