ARTICLE · 11 JANUARY 2018

FTC Issues Guidance On Legal Multi-Level Marketing

Klein Moynihan Turco LLP

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Last week, the Federal Trade Commission (the "FTC" or "Commission") released legal multi-level marketing ("MLM") guidance for direct sellers, providing important practice insights for those that follow the space.

United StatesConsumer Protection

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Last week, the Federal Trade Commission (the "FTC" or "Commission") released legal multi-level marketing ("MLM") guidance for direct sellers, providing important practice insights for those that follow the space.

What are the key takeaways for MLMs?

Legal Multi-Level Marketing Campaign vs. "Pyramid Scheme"

On January 4, 2018, the Commission issued non-binding guidance in question-and-answer format regarding legal multi-level marketing – the practice of distributing products or services through a network of salespeople who are not employees of the company and do not receive a salary or wages. The FTC condemns so-called "pyramid schemes," which are MLMs where participants pay for product and the right to receive rewards for recruiting other participants into the program which are unrelated to the sale of the product to ultimate consumers.

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