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More about network marketing in a recession

I made a very long post in a forum, earlier this evening, most of which I'm about to repeat here. A recent member asked "What home business would still work from home, if the economy is so bad I am wondering if either business that I am thinking of doing would work no one has any extra money to buy anything extra. Please give me some insight as to what you think."

Good question, no?

One of the replies said "During times of recession or depression network marketing is very successful because people are looking for something different. Look for a low entry point to start and yes stay away from luxury items."

I could hardly disagree more!

I don't think it's quite right that "no one has any extra money to buy anything", in that I think there are recession-proof customers, as my friend Robin van der Merwe puts it. But obviously there's a recession, and one can hardly be unaware of it.

My own impressions are:-

(i) People in direct sales business (this group includes me, obviously) are mostly whistling in the dark a bit and saying how good a recession is for their business, because it increases the number of people looking for and looking at home-based business opportunities

(ii) While the second part of that is true, it has its downside, too: some of those looking are "looking in desperation" and that's no way, and no time, to be starting a new business and their attrition-rates are very high

(iii) Network marketing companies with expensive products, few genuine retail customers, and high "autoship" volumes are getting into trouble, and some are going out of business, because when people are short of money, distributors whose monthly earnings are lower than their monthly "autoship" commitment - and that's huge numbers of people - start cancelling their "autoship" and effectively dropping out (mostly, they don't call it "dropping out" - I do!), and this can have a colossal impact on companies' cashflows and even their survival

I think that now, if ever, is a time for people to be really careful what sort of home-based business they choose to pin their hopes and future financial prospects on. It's a time to take a long-term view. It's a time to do more "due diligence" than ever before. The last point, especially, because the sad reality is that there are all sorts of astonishing scams touting their "opportunities" at the moment, preying on the desperate, the gullible, the inexperienced and those who don't quite know how to do due diligence.

Many network marketing companies have slipped into insolvency over the last few months, leaving their distributors "high and dry"; and I don't doubt that some more will over the next 6 - 12 months, too. The history of "MLM in recessions" shows that this has often been the case, and it should surprise nobody, I think.

As an experienced network marketer, I can tell you that the number of people approaching us wanting information about our business is higher than it was at this time either last year or the year before. The number of "suitable applicants", however, is about the same. In other words, the proportion for whom "setting up a network marketing business" is an appropriate solution to their situation is lower. This creates more work for us, of course.

It's easy to imagine that this must be a good time for network marketing simply because there are so many "prospects" around. This is a very superficial and misleading view!

Respectfully, I also don't really quite agree with the point above about "luxury items". Some luxury items are actually among the ones only ever really appealing to "recession-proof customers", and can therefore be proportionately affected less by the recession than many others. Paradoxical but true!

Like many successful MLM-ers, I would actually advise people to look specifically for a high entry-point to start (and like all the really successful distributors in my company, I'm pleading with my company to increase it, because ours is too low and that's giving us problems). The great fallacy is to assume that it will be easier to sponsor people if the entry-cost is "more widely affordable", and that that's a good thing. It's true that it will be easier, but it's a huge mistake, in my opinion, and not a good thing at all, especially in a recession: people who are attracted primarily by "low entry cost" make up a very large proportion of the "attrition-rate", and this is exactly the kind of short-term, superficial thinking that sees so many people dropping out of home-based business opportunities after a few months. Those (fewer of them, which is a plus, as they're easier both to identify and to support!) who can still afford higher entry-cost do much better in the long run. It's not about how many people you can sponsor. It's about what proportion of the people you sponsor survive in the medium-term and long-term and build your business for you!

Buying leads for Network Marketing

Leads are, in a sense, the life-blood of your business if you're building by attracting those interested in a home-based business opportunity rather than simply by promoting your products and gradually turning regularly re-ordering customers into distributors (we do both).

It doesn't actually matter in principle whether they're self-generated leads or bought-in leads - they're all "leads".

I use mostly self-generated leads and have, overall, done better with them than with bought-in leads, but I have used bought-in leads on four (or possibly five) occasions over the last seven years and done ok with them, and may do so again some time in future.

From my own experiences with bought-in leads and those of others in my group, my little tips about buying leads are something like as shown below (all opinion, of course) - some of them are based on ensuring that the people concerned are genuinely already looking for a home-based business opportunity (if not, they are not "leads" in any meaningful sense of the word):-

(i) You need to check the type of wording to which they have responded ("business opportunity" type of wording is good, "work-at-home" type of wording is useless: you can sponsor these anyway but a high proportion of them will drop out pretty quickly because they weren't really looking in the first place for a "business opportunity" per se)

(ii) They need to be relatively recent

(iii) It's better if they have not yet been contacted (from that source, anyway) by anyone else offering a business opportunity and will not be sold to more than one other person

(iv) Phone numbers are essential: there's little point trying to do this by email

(v) They must not have been incentivized in their collection-process (people wanting a free entry to a prize-draw are not "leads")

(vi) They must come from a reliable source which you or people in your company have previously used beneficially

(vii) They must not be sold by an MLM-based process in which others in anything like an "upline" are earning commissions on their sale (the prices will be artifically inflated to allow for the payment of commissions and a high proportion of these, in practice, will turn out to be "business opportunity jumpers", too)

I have had much better experience with leads costing about $5 - $6 each than any other, cheaper types, though obviously there's quite a lot of luck in it.

My self-generated leads are roughly on a par (in overall quality terms) with the very best leads I've ever bought (which were $8 each) and they cost me a lot less than that to generate. So mostly I just use my own. But there's nothing "wrong" with delegating/outsourcing the lead-generation function of your business to a specialist - if you can find the right one.

My overall impression: don't expect very cheap leads to turn out, in the long run (though they may appear the opposite in the initial stages when you sponsor some of them) to be anything much more than a waste of time. Just my perspective.

FTC cracks down on scammers

Unfortunately (for those of us promoting real, honest, ethical business opportunities) this recession is seeing a huge increase in the number of "scams" being promoted as well.

I've never seen so many illegal cash-gifting schemes, money-games, recycling-matrixes and fake "MLM opportunities" without genuine retailable products/services circulating as there are at the moment. It's a horrendous prospect, because in the long run all it does is collectively blacken the reputation of the home-based business-opportunity "industry".

This is partly a response to the fact that when people are desperate to find an additional income-source, it's easier to attract them into questionable/illegal programs, because not all of them do any "due diligence" at all (or know how to).

The better news is that America's Federal Trade Commission is now starting to take more of an interest.

Online and/or offline lead generation?

Are you generating leads online or offline?

The retention-rate of distributors sponsored as online leads is significantly worse.

At the Network Marketing Forum two successful US-resident network marketers (in different successful companies) both of whom I respect greatly have recently told me (quite independently and spontaneously) that they've eventually and reluctantly taken the decision to concentrate on building internationally, and no longer to sponsor any internet-derived domestic US leads at all, because they're fed up to the back teeth of putting time, effort and energy into training people almost all of whom drop out of the business within their first 3 - 6 months.

All the people in my own company who have tried using the internet to generate leads (and we have no rules against it at all) have found that what they have ended up with is a collection of people who have been in many MLM's previously, never managed to make a living in any of them, dropped out of them, and moved on to another company, probably thinking that "this will be the one", without ever quite making the connection and realising that the unifying theme in all their previous experiences was that they tried to build their businesses online exclusively.

My belief is that "internet leads" who do express interest in a home-based business opportunity have usually expressed interest in many, over long periods of time, and the reality is that they're very high risk for continuing to do so after you put your time/effort/energy into getting them started in your business. Some (perhaps many) will inevitably be lured away to the latest, most hyped, most flashy new "pre-launch". This very rarely happens in the case of offline-generated leads, whose retention-rate is therefore much higher, partly perhaps because they're so much less likely to be continually exposed to all the hype-promotions.

My feeling about this is that it's a bit like dating a philanderer rather than a man who's actually looking for a long-term partner: whatever their apparent intentions on joining you, quite often their behaviour-patterns will subsequently repeat themselves.

I don't do anything difficult or clever or complicated at all in building my own business, but since I've been on the internet myself, more than 2 years of chat with other MLM distributors (in the two forums I frequent), some of them rather successful ones and many more not earning a living at all, have convinced me that our own retention-rates (for both distributors and customers, actually) are dramatically higher than average, which I attribute partly to the fact that we're not doing our business-building online at all. We're generating "real leads" rather than "virtual leads".

We have no "autoship" but my company audits very accurately (and accordingly to very strictly defined parameters) on a month-to-month basis the sales volumes, sponsoring numbers, personal purchases and so on of all its distributors. This information is (understandably) not publicised, and I can therefore do no more than invite you to take my word for it that it makes very impressive reading, with the notable exceptions of people venturing online to try to promote their businesses.

Many people, especially in the early stages of building their MLM business, make the mistake of measuring how well they're doing according to the number of people they're sponsoring. The learning curve is sometimes slow and difficult. People imagine that if their distributor-numbers grow steadily over their first few months, that they must be doing the right thing and securing their future. Sadly, it ain't necessarily so. All too often people are earning no more after 12 months than they were earning after 6 months. I believe that this "syndrome" is very common in businesses built up from online-generated leads and much rarer in businesses built up from offline-generated leads, because the medium-term retention-rates are wildly different and one can all too easily get a entirely false picture from the short term, which is all that many people ever really see because they change companies so often and never actually achieve anything stable, let alone duplicable.

Full disclosure?

So, according to this article, America’s Federal Trade Commission allegedly plans to monitor blogs for payments. They probably want full disclosure of any compensation. And I'd want that, too, as a consumer. If someone's recommending something to me and they're going to be paid a commission out of it if I buy it on the strength of their recommendation, I'd kind of like to know that before I read their "review" of it. Wouldn't everyone? Otherwise you might feel pretty "deceived", no?

Conversations about stuff like this leave me with kind the same sort of feeling I get talking to some of the people struggling to build network marketing businesses, who are teaching a business-building system destined to fail, when they say stuff like "You sell the products by personal recommendation and it's exactly the same as recommending a movie or a restaurant"!

Hello? "Exactly the same?!" They conveniently ignore the fact that in one case you're getting paid for the recommendation and in the other you're not and the person you're talking to knows that.

Which is why, of course, it's not a duplicable system that works for many, because most people are understandably too embarrassed to do it, being fully aware that the people they're talking to will feel they're recommending it "just for payment" and it will undermine their relationship. Which it often will.

Consumers are misled and deceived if they're not told openly that your recommendation arises from a commercial incentive.

"But I want to be able to sound objective and impartial about it", to some people, is just another way of saying "I want to be able to fool people". It doesn't have to be, of course. And to those who examine it a little more deeply, this will actually be an advantage.

It's just like increased regulations in the network marketing industry: the people who complain about "nanny statism" and "interfering governments" and "too many regulations" are just missing an opportunity, because in the long run, "cleaning things up" can only be to the collective good of an entire industry. And that's a hugely significant issue to the average network marketer. If they only understood it more clearly, one of the main reasons they have difficulty building their businesses is the bad reputation (in some places more than in others) from which the "industry" suffers. And that's brought about - just as the worldwide recession was - primarily by failure of regulation.

People with "review-style blogs" who do negative reviews as well as positive ones, and are simply honest with their readers that they earn a commission on products sold through a link will have absolutely nothing to fear from the FTC or anyone else.

Another advantage of "rule changes" like this is that they tend to put everyone on a level playing-field, and gradually weed out the more obviously dishonest participants. It's good for everyone. And it doesn't hurt to use disclaimers when everyone has to use them.

Look on the bright side: half of Blogger and Wordpress might get shut down over this. Those who simply comply will really flourish and prosper.

Sponsoring from Genealogy Lists

In my opinion, trying to sponsor people from MLM company "genealogy lists" (lists of distributors of former and/or current companies) is absolutely the very top of the list of things not to do.

These are people we are not willing to sponsor.

A proportion of them will be "jumpers". Others will have multiple businesses, and/or a history of multiple businesses. Others will already be working another network marketing company at the moment, in which case we wouldn't be willing to sponsor them anyway.

Unless possibly you have a genealogy-list from a company that's just very recently gone under leaving all the distributors afloat, or something very similar, all you know for sure about such "leads" is that they've failed to make a living in companies in which other people have managed to make a living, and/or they already have an MLM business.

I suspect (some will disagree with this and consider it "judgmental") that it all comes down to whether you're willing to spend your time/effort looking for and sponsoring and coaching and getting started with "floundering network marketers" and people with a history of bad previous judgments. I'm not. And we don't want people in our downlines who are, either.

Someone very successful indeed in my group says that it's a bit like dating married guys: they're not going to leave their wife for you and if they do, within a couple of years they'll be leaving you for the younger/flashier/newer/more-hyped-up model anyway, so why get involved with them in the first place.

All the successful people in my company have done best, over the long term, by building their business with people who have never been involved in network marketing before. They're entirely fresh and unprejudiced (the ones willing to join you, anyway!), and they'll be able to learn your company's duplicable system and build a business without being full of all sorts of nonsense they've "learned" elsewhere and not made a living with because the people teaching them didn't know what they were talking about. (This is also one of the reasons why the overall success-rate in network marketing is so low among people trying to build their businesses predominantly online: they're dealing, to a greater or a lesser extent with "previous failure".)

It's (relatively) easy to sponsor people from genealogy-lists, of course, but very difficult to retain a significant proportion of them.

Unfortunately, it's easy to find people in internet forums saying "I wasn't sponsoring anyone at all until I started using genealogy-lists, and now I'm sponsoring plenty". This may be so, but two or three years later those people are not still in the business because their downlines dropped to bits. In the short-term they thought it was working, and the learning-curve is long and slow with this.

You can't tell them that at the time because they're only copying what they've been told to do (by someone who knew no better and was only half-way along the learning-curve) and you can't tell them later either, because they're not still there. So appearances can be very deceptive indeed over this issue.

I suspect that if you ask "network marketers" in general whether or not this is a reasonable idea worth trying, quite a lot of them will tell you that it is. But if instead you ask only "network marketers earning over $15,000 per month" (or whatever - in other words just the successful ones), you'll look long and hard to find anyone at all recommending this "technique", and when you do find one, he'll be trying to sell you something.

What is a "lead"?

I see, in our forum and others, many discussions exchanging ideas and suggestions for lead-generation for network marketing businesses.

My friend Robin van der Merwe makes the good point that where she sees most people dropping the ball is in their Marketing Plan (or lack of it!). They fly by the seat of their pants each day, starting the day with some question like “Well, what shall I do today?”. If you’re starting the day with this question, Robin rightly observes, you’ve already lost the race.

The other area where I see a lot of people dropping the ball is that they're putting time and/or effort and/or money into finding people who are not really leads for their businesses: they're just people whose email addresses and/or phone numbers they were able to get. I think this is yet another illustration of what a huge mistake it can be to go fishing in the wrong pond (as Robin also puts it).

Lead generation is a significant part of all of our businesses, whether we do it ourselves or delegate that function of our business to an outside source.

Just as it’s a mistake, when sponsoring distributors, to aim at the ones most easily sponsored (“jumpers”, people looking for “work-at-home”, people who have been in 5 other companies, regular internet forum-posters and so on, all of whose collective turnover as distributors is dramatically high), it can also be a big mistake, when trying to generate leads, to target those most easily generated, because in reality they may not be “leads” at all.

I think all such discussions really need to start from the perspective of a clear understanding of what a lead is. We will all (perhaps rightly and understandably) have our own definition of this concept, some of us more clearly defined than others. Some people think that the email address/phone number of someone who has requested free information about “xyz-problem” is a lead for the purposes of building a network marketing business. Those people really have their work cut out for them, in my opinion, and will have “fun” trying to duplicate it, too, because these are not business-building leads at all: they’re simply the email addresses and phone numbers of people who wanted free information about “xyz-problem”.

When you’re building a home-based business, a lead is someone who is already looking for a home-based business opportunity. There are such huge numbers of these people around at the moment that it makes little sense to accumulate a “list” of email addresses of other groups, hoping that bombarding them with enough autoresponder messages will eventually “convert” a small proportion of them into becoming interested in your business opportunity. It will, surely, but will they still be with you and building your business for you 2 years later, if they weren’t actually looking for a home-based business opportunity in the first place?

Do retail sales matter?

Look at part of a declaration by Dr Peter J VanderNat, a US Federal Trade Commission economist and expert witness on “pyramid schemes” in the case of FTC vs. Equinox International Corporation, in 1999. “In distinguishing between a pyramid scheme and a legitimate business,” he said, “the critical issue is whether rewards paid in connection with recruitment are tied to, or are derived from, the sales of goods and services to the general public (i.e. retail sales)”.

The previous year, the prepared statement of Debra A. Valentine, General Counsel for the U.S. Federal Trade Commission on pyramid schemes, presented at the International Monetary Fund's “Seminar on Current Legal Issues Affecting Central Banks” in Washington DC, contained these words: “Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. A lack of retail sales is also a red flag that a pyramid exists.”

So, there have to be genuine retail sales to genuine retail customers, in network marketing, otherwise the business isn’t legal. This is one of the reasons why the products matter so much: if people (meaning not just distributors!) aren’t actually buying them, the business will eventually be closed down by the legal/regulatory authorities and/or courts.

For network marketing, product matters enormously.

As a network marketer, you are hitching your business and your income (and eventually those of other people, too, albeit that that's ultimately their own responsibility) to the stability, success and longevity of a company whose fortunes and survival you're normally unable to influence. The network marketing companies that survive for the long term are the ones with quality products in genuine retail demand. No company makes money for the long term without being able to sell its products. And not just to people joining for the business opportunity.

There are also huge legal issues around product, at least in Northern America and all of Europe, and I believe elsewhere, too: the products have to be of genuine value. The primary legal test that all enforcement agencies, regulators and authorities use when initially looking at a company if they ever get any complaints/inquiries about it is “Are the products of genuine value and being sold to people for value other than because of the attached business opportunity?” No company that doesn't produce a clear “yes” to that question can survive indefinitely.

This is one the most important and most fundamental reasons (though there are many others) for joining only well-established companies that have already successfully proven, in a notoriously difficult “industry”, that their products have value and are genuinely being sold (i.e. not just being bought by people because of an attached business opportunity).

Here’s an article from the website of a specialist network marketing law-firm in America, explaining why the true value of the products, and the fact that they mustn't be linked to recruiting, is so absolutely fundamental to the legality of network marketing businesses.

Three questions answered

This afternoon someone asked me (in a forum) three questions about what I do, and my answers overlapped so much with what I was intending to offer here as my next blog post that I decided I could amend my reply only slightly and put it here, too. So here it is:-

What is it that you do?

I'm a distributor with a British-owned MLM company which exists in the UK and 8 other countries of Eastern/Northern Europe only. I've been in it for 7 years (near enough) now and it was about 8 years old when I joined (and had existed even for a while before that in a non-MLM form).

I have a big and growing UK downline which I run/grow jointly with one of my key distributors who lives in London

I also have a not-so-big but now very rapidly growing downline in another Eastern European country where I go regularly as a guest speaker/trainer for 5-day visits, with Distributor Training meetings during the day and Opportunity Meetings in the evenings - all very old-fashioned stuff tailored to an emerging market in a country where many people are actively looking for a stable, proven, home-based business opportunity (and all very lucky for me, of course).

What makes you successful at it?

Here’s a big mixture of stuff (in no particular order and without any planning, it‘s just "thinking aloud"!) that I think made/makes me successful at it:-

- a purely lucky start: I was just 18 when I started and wandered into it without really knowing exactly what I was doing

- I chose a well-established company with genuinely good products in genuine demand from genuine retail customers and very high re-order rates (and the sales volumes to prove that)

- I treated it seriously as a business, with working capital, in the form of a small business development loan, and a business plan from day one, and I had to be successful otherwise I would have had to get a job (and the only other work I had readily available was something I didn’t enjoy and wanted to stop doing, though I admit it was well paid)

- we have one simple, reliable, easily duplicable business-building formula which has been proven to work for all those who are willing to follow it (without this, you really have nothing at all), and recently it’s actually been getting better and better because all our competitors these days are trying to build their businesses on the internet (often unsuccessfully, hence their high drop-out rates), leaving the field much clearer for us in the real world

- we show our business opportunity only to people who are already looking for a home-based business opportunity (that’s easy at the moment - there are if anything too many of them right now!); no persuading, no convincing, no trying to "build relationships" with people just so they’ll look at my business opportunity "because it’s me who’s asking" and I’ve "established credibility" and all the other crap words of wisdom you hear people discussing about prospecting when they have either a financial or a misplaced emotional incentive in trying to use one of the many and various kinds of "bait and switch" methods to build their businesses

- I don’t use any kind of internet marketing at all to build my business (and neither does anyone else in my company who’s achieved any real success)

- I don’t use "warm market" techniques at all (my own warm market are not people looking for a business opportunity - though this isn’t true at all of my downline in one country where I’m building, where my people can actually build successfully from their warm markets just because they all already know a lot of people who really are looking - this is due to local economic circumstances in Eastern Europe)

- I won’t sponsor people who are currently involved with any other MLM company (and I try my very hardest to duplicate that throughout my entire downline in every country in which we trade)

- I won’t sponsor people who have a history in the industry that makes me think they’re probably a "jumper": anyone can take a few goes to find the right fit for themselves; anyone can have a company or two go under, especially if they didn’t know how to do due diligence, but if they’ve previously been in four or five other companies, they are really not welcome with us; call us prejudiced if you like, but to me it’s just a businesslike, statistical thing to ensure that we avoid wasting our time (and I try my very hardest to duplicate that throughout my entire downline in every country in which we trade) - I think this is a really big and significant point, because it dramatically reduces the proportion of our time and effort and money that we’re spending identifying, screening, training and supporting people who are, collectively, highly likely only to disappear on us!

- I try not to sponsor anyone who I think loves complaining/criticising (this is a personal thing for me: I just don't want distributors whose phone-calls I'll want to avoid!)

- I try not to sponsor anyone who wants to re-invent the wheel (we screen out these people with our initial materials, really: they have to understand fully and clearly that they’re going to be given a simple duplicable formula and they’re going to duplicate it, first, to get as far as having a live conversation with us)

- I don’t measure my success by "numbers of people sponsored" but by what they do (it’s easy to sponsor jumpers, people looking for "work at home", people who want to use internet marketing, and so on, but only very rarely would they ever build your business for you: the reality is that two years later they’re not still there and you’ve just wasted a huge amount of time and effort looking for them and getting them started)

- I'm not emotionally attached to the results (and to be honest I never was, after about my first month in the business). When (as every day) I'm talking to a prospective associate on the phone, it genuinely makes absolutely no difference to me whether or not they join. If it's not that person, it will be another. At the end of the month, or the quarter, or the year, I will have sponsored as many people as I have the time and inclination to sponsor and my income will continue to grow, barring accidents

- I don't sponsor people who don’t have enough working capital to set up, run and develop their business, and know - at least roughly and even if only from me - what that involves (and I err on the side of exaggerating the amount they'll need, to make quite sure about this - and again, I try my very hardest to duplicate that throughout my entire downline in every country in which we trade)

- I don’t undervalue my time by doing myself things which I can employ someone else to do at less than the hourly rate at which I value my own time (and that’s a lot of money now, but I used to work it out pretty carefully and accurately even in my first year when I saved up or did half a day’s work at something else just to be able to pay people to hand out flyers and drop-cards for me)

- I spend time/money/effort trying to attract educated (because they‘re known to be educable, at least in some contexts), intelligent, successful people with a business mindset who have no experience of MLM but are looking for a home-based business opportunity because (for whatever reasons, e.g. redundancy, economic forces, physical disability or just disillusionment with their current profession) they want to earn a big, full-time income by being self-employed at home

- I’m very reliable: if I say I’ll do something for someone then I always follow through and do it, if humanly possible (and its corollary: I don’t agree to do stuff that will be too difficult or too time-consuming for me, and especially if people want to try something new, then I don’t even want to know/talk about it, and I tell them that really openly and clearly and with reasons before they start, to avoid later disappointments - theirs and mine!)

And why do you love it?

Well, I don’t always! (But I do other things as well, to break up the monotony a bit). There are still times I feel I don’t own my business as much as it owns me, to be honest, but most self-employed people with successful businesses probably feel that sometimes? Anyway, it’s easy enough and it’s better than working for someone else, isn’t it? And the flexibility is great: I can work the hours/days I choose (within reason). And then of course there’s the money, which is really compelling, I admit. I never tell anyone exactly what I earn from it, but as a ball-park impression, I have a long-running friendly fraternal earnings competition with my much older brother (and he’s not a street-sweeper: he’s actually a very successful heart surgeon in a private hospital in the UK, just to give you an indication of his earnings-potential) and in 2008 I actually earned a little more than he did - so, ok, it‘s not "footballer money" or "pop-star money", but it’s still a fortune for someone my age with no professional qualifications who has never actually held a proper job at all or wanted one. And all the time, of course, I’m building up an appreciating asset that I can sell any future time I like for a big capital sum. So, yes, I suppose I love it.

Cash gifting scams

 Once again I see a fresh wave of new-ish members of forums (not our forum because we "edit" if ever needed), making many short posts in order to have their signature files displayed as much as possible to promote their illegal cash-gifting programs. Some forums are now blocking them and deleting their posts in order to protect themselves against the allegation that they're aiding the promulgation of this illegality; others are not.

I think the current economic downturn and uncertainty is going to attract large numbers of people into this sort of illegal "opportunity". Those of us making a living in Network Marketing should particularly be on our guard and speak out about them. Saying nothing is not, on any level, the right thing to do. Ours is also the business model that gets seriously damaged in the long term by the way these criminal programs market themselves.

I thought it might be useful to point out a few things and provide some helpful links on this subject.

1. Some of these criminal enterprises dress themselves up as "multi-level marketing", but if there's no genuine product (and in many cases there isn't even a pretence of one) they are rightly illegal. In the US, Canada and all of Europe anyway - and I'm pretty confidently guessing in other countries, too.

2. Their promoters invariably say things like "There's nothing illegal about cash gifting" and challenge critics to point to the specific item of statutory law, which varies from country to country of course, saying that gifting is illegal. It isn't always statutory law - it's sometimes case law. The reality is that they are trying to con us, and sometimes to fool us by quoting tax regulations which are entirely irrelevant. Gifting itself is not illegal, but soliciting a cash gift from a recipient whose intention at the time of the "gift" is to become apparently entitled to make profits by soliciting cash gifts in turn from third parties is illegal. Don't get sucked in by the lure of "easy money". People go to prison for this. Don't be one of them. Don't assume "eew, well, that's just other people, not me".

3. Members living in the US may be interested to see this page on the FTC's own website warning about the illegality of these "opportunities".

4. In a recent forum discussion, my friend Robin kindly shared this link from the North Carolina Department of Justice. (This particular one was shared simply because one of the people who apparently didn't understand why cash gifting programs are such a big deal happened to be from North Carolina, but information like this is widely available online from just about every state in the U.S. and most countries around the world. This just happens to be a nice concise one, explaining the illegality unambiguously.)

5. I have no idea how "official" this site is (I suspect not very), or to whom it belongs, but if anyone's interested, I've recently come across the "Cash Gifting Watchdog".

There are also lots of "opportunities" which don't call themselves "cash gifting" but actually are. Typically, they have a "product" of which the sole purpose is to learn how to promote the business itself, i.e. not a real product which anyone would buy other than for the attached business "opportunity". Some people are gullible enough seriously to imagine that because there's a "product" at all, that somehow makes it legal. Others have a "don't know - don't care" attitude to the legalities involved. Some even have the sheer brazen effrontery to promote these things online, at forums like WAHM.com. For anyone with a macabre fascination in the seedy side of life, here's a link to a recent WAHM.com discussion. And here's a very recent one about exactly the kind of scam made increasingly popular by the current economic climate (look quickly before their Moderators delete it!)