Why The Government Cracks Down On Network Marketing

Have you ever wondered why Government cracks down on network marketing? There is a fine line between what is legal and illegal when it comes to network marketing. It is only when this line is crossed the Government interferes and cracks down on the scheme.

Network marketing is not new. In fact, it is a marketing practice for several decades. But what is happening right now is unprecedented. More and more people get attracted to join this scheme more than ever. Why? Simple: small investment compared to potential income you will get.

Network marketing thrives in one simple principle: get same people to invest, promote and sell the product for the company.

What's wrong with this? Network marketing promise to give you attractive commission which is economically improbable when factoring in the investment placed—the same reason why it is very popular.

This is also the reason why the government cracks down on this type of marketing strategy. Most companies especially those that sell health products, diet supplements, and or common household products are being watched.

There are also network marketing companies that do not sell products at all! These companies only make money on members that have to pay in order to sign up. They make more money as more people sign up through their existing members.

The cycle goes on until it reaches a saturation point, when the founders are so rich, and when the members realize that it is all worth nothing and everything they have invested for is gone.

It must be clear though, Federal Trade Commission issued a decision that multi-level marketing or network marketing is not illegal per se.

What makes it illegal is when it becomes a profiteering scheme that violates the very nature and the laws of marketing. So beware.

 
 

Article Tags: Government Cracks Down, Government Cracks, Cracks Down, Network Marketing

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR