The reality, the risks and the rewards.
Multi-level marketing (MLM), also known as network marketing or direct sales, is a system for selling goods or services through a hierarchy of distributors. A business recruits distributors (sometimes called consultants or associates) to sell its products or services, and keeps a percentage of their sales. Distributors are encouraged to recruit other distributors by earning a percentage of their recruits’ sales. Your distributors and their distributors are called your downline. Upline refers to anyone above you in the chain—your recruiter and their recruiter and so on. The upline can collect portions of sales from its entire downline.
MLM often involves work-from-home opportunities for distributors and, because of that appeal, is a big target for scammers. Red flags for potential distributors are when an organization:
Any of these warning signs should prompt more investigation when signing on with a MLM company. It’s illegal to operate a pyramid scheme and the Federal Trade Commission investigates the sometimes fine line between the two. An MLM has to show that it earns more money through sales than recruitment to be considered legitimate. Because of the gray area, the industry faces criticism and frequent lawsuits. It also tends to incur chargebacks and inconsistent sales. Financial institutions therefore classify MLM merchants as high risk.
BankCard USA helps MLM merchants by specializing accounts that:
Many MLM merchants sell beauty and fitness products, home ware, clothing and jewelry, to name a few typical examples. The business structure is lucrative when set up properly.
Give us a call today for a risk assessment and more information about our MLM merchant account application. We can help give your business a leg up in the industry.