Network marketing has an image problem due to the fact that it is often difficult to distinguish legitimate network marketing from illegal pyramid scheme. Network marketing businesses operate in more than 100 other countries, and new businesses may use terms like “affiliate marketing” or “home-based business franchising”. However, many pyramid schemes try to present themselves as legitimate MLM businesses.
The FTC advises that network marketing organizations with greater incentives for recruitment than product sales are to be viewed sceptically. In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money.
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