3 Common MLM Business Problems

Written by Wall Street News on February 27, 2018. Posted in Federal estate tax law, Judge abraham sofaer, Mock trials

Contract disputes

There are all types of claims out there with the next big money making plan. You see this information on commercials, through friends, and especially on the internet. They inform of you of how you can make money, simply by selling a product or taking a class. However, these businesses often use sneaky marketing techniques to leave out important information.

Exaggerate income potential
One of the most common techniques used is to exaggerate income potential. These businesses trick interested people into thinking that they can make sometimes millions of dollars. Yet what they don?t tell you, is that there are only one or two making that amount and they are the owners of the business. It is illegal to falsely market something in this sense and it can lead to securities class actions. The investors have to notice the false information though and have the ability to prove it, which is not always possible.

Make false claims about the product
Businesses that sell products sometimes make false claims about these products. The government and especially the FDA regulate the types of marketing claims you can make about products. For example, you cannot guarantee that something will make you lose weight or make you healthier. Of course, there are marketing terms to get around this and still imply the same advantages of the product. These cases also sometimes end up with securities class actions lawsuits.

Offer a sales plan based on recruiting alone
MLM, or multi level marketing, is perhaps the most common type of business advertised today. They are also the type of business that ends up with the most securities class actions lawsuits. Not every MLM business is considered a scam, but if the businesses single sales plan is to recruit individuals underneath you, it is likely considered illegal. Fortunately, the government and FDA have really begun to crack down on these types of businesses. They give people a false hope and then cost them thousands of dollars when they are unable to recruit more people.

How to handle a business class action lawsuit
Do you feel like you were wrongly informed about a potential investment opportunity? It is possible that you have rights and you could be owed compensation in court. Similar to bankruptcy cases, there is a process that should be headed by a corporate compliance attorney. If the business is already dealing with bankruptcy issues or currently in the process of filing for bankruptcy, the process can get even more complicated.

Except to the extent modified by parties, class actions will be handled by FedArb Arbitrators or Panels in the same manner as they are handled under FRCP 23, including certification, notice, and settlement. To complicate the process even more, approximately 90% of all chapter 11 debtors have less than $10 million in assets or liabilities, less than $10 million in annual revenues, and 50 or fewer employees. Filing securities class actions lawsuits take the knowledge and experience of an attorney familiar with the process.

Small businesses claiming to give you the perfect work environment and a great money making opportunity can be tempting. It is important to remember, however, that many of these MLM businesses are hit with securities class actions. They make false advertisement claims and give investors false hopes. Be careful before signing on to a new work from home business.

Leave a comment

You must be logged in to post a comment.