[...]... level and anti-pyramid laws are drafted and statutes that specifically define and regulate interpreted very broadly This allows Multi-Level Marketing.1 Most states do have regulators to encompass all of the possible anti-pyramid laws There are no comprehensive variations of illegal schemes and have a defining laws on the national level in the United jurisdictional basis to close them down The States, and... that commissions are paid regardless of whether the distributors actually retail the products they purchase.” Because states have different legislation, a program may be legal in one state and found to be a pyramid in another In addition, judges may interpret a statute in a matter not consistent with its literal terms And many underpaid government regulators are quite uneducated in this area and are... must be carefully determined based upon the number of products the company has and what a realistic average volume should be A small distributor who mainly retails may not always break away, yet, breakaway qualifications must be achievable with a fair amount of effort by a serious business-builder A 3 x 5 Matrix means that everyone can have three people on their frontline level, and get paid through... compensation five people, the company will be hard pressed plans in use today: to give any meaningful type of distributor 1 Stairstep-Breakaway support A credible company should have a 2 Matrix president and CEO (which may be the same 3 Unilevel person), a chief financial officer, a chief operations officer, an administrative manager, 4 Binary a distribution center manager, a data Let’s look at them... broke away and at the top of the plan But for each of these big built a massive organization As a result, the earners, there are tens of thousands of small distributor did not have a large enough distributors not making a monthly check big group left over to qualify for overrides on the enough to take their families to the movies These big distributors can wave their mega distributor who had broken away... types of transactions are actually a “headhunting” or “recruiting” bonus, and thus constitute a pyramid When it’s all said and done, there are many inconsistencies among the state and federal While this Nu Skin case is obviously an laws Ultimately, there are three major factors abuse of government power, for the most part, that both federal and state regulators look to 15 © MMV Gage Research & Development... processing chief, a customer service manager, and a marketing vice president or manager The Stairstep-Breakaway is actually a combination of two plans: the Stairstep Plan Some of these positions, even in a brand (which is used to pay you on the volume of new, start-up company, will require assistants your personal group) and the Breakaway plan and line employees There may be nothing for (which pays you for... passes the first phase of the test However, this doesn’t mean that every company that claims to be a legitimate The second analysis is on the actual network marketing program is one They’re operation of the program Regardless of how not There are some telltale things that can the compensation plan is designed, regulators signal a program is not legitimate Let’s look look at what the distributors actually... actually spend closer at some of these factors their time doing If the emphasis of the program is on recruiting rather than product As a practical matter, it’s impossible for or service sales — it still can be determined regulators to predict and legislate all of the to be a pyramid infinite variations of legal and illegal marketing programs For that reason, multiOnly a few sophisticated states have... fifteen thousand dollars a month) that someone must maintain to receive overrides on the directors that break away Due to the lower average volumes that they actually achieve, 99 percent of the In a Breakaway plan, once someone reaches a certain rank distributors will never consistently qualify So (often called Director) – they “breakaway” from your personal group You then receive an override on the . cars, the man who landscapes my lawn, my massage therapist and my usual waitress at my favorite restaurant, all work much harder than I had to — yet none. and legislate all of the infinite variations of legal and illegal marketing programs. For that reason, multi- level and anti-pyramid laws are drafted and interpreted