The ethics of network marketing
1 June 2009
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By Gerald P. Nehra
Why should a network marketing company be ethical in its operation? My short answer is that what makes a network marketing company “ethical” is also what keeps it legitimate and legal. So, what is it? What makes a network marketing company ethical or legitimate? It is often not clear-cut, but these applicable legal standards have been in use for decades. To survive scrutiny, a network marketing company and its income opportunity must: 1. Involve the sale of a real product or service; 2. Not require a commissioned fee solely to participate; and 3. Maintain operational integrity.
The product or service must have real value to end-use consumers who are not affiliated with the company. Further, the product or service must actually be sold regularly to non-participant buyers.
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It is, of course, an acceptable practice for participants to purchase the company’s products or services for their own use or to accumulate an inventory of products for ready resale, so long as the inventory quantities remain reasonable and the company adheres to acceptable product return and buyback policies.
Another name is a “headhunting fee,” which is a payment required to be made by a prospective participant for the right to earn compensation, of which compensation is derived from the recruitment of others who also pay the fee. There cannot be a fee to participate, other than an at-cost starter kit purchase requirement.
To read this article in its entirety you may purchase the June 2009 Edition of NMBJ by visiting the NMBJ Online Store or call 815.726.5555
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Any MLM opportunity that promotes recruit, recruit, recruit and does not reward the distributors for retailing is definitely a scam. Distributors should be able to do well in a company with little or no recruiting. It all boils down to how diligently one evaluates an opportunity before joining.
16 June 2009 at 9:52 am