Year after year hundreds of network marketing programs, also known as multi-level marketing programs, are promoted in Arkansas. Although some network marketing programs are promoted and operated in accordance with Arkansas law, many others constitute illegal get-rich-quick pyramid schemes.

How can the Arkansas consumer distinguish a legitimate marketing opportunity from an illegal pyramid scheme? Consider the following WARNINGS. If the solicitation to join the marketing program includes any of the characteristics listed in the WARNINGS below, BEWARE!

POTENTIAL EARNINGS - If the promoter solicits your participation in the program by suggesting that you will make substantial earnings by joining and recruiting, BEWARE! The promoter should not represent that any income level is likely if you join the program. The promoter should not promise potential earnings for you based upon his earnings, or those of his sponsor. If any representations are made as to potential earnings, these should be the documented earnings of the average participant in the program.

GROUND-FLOOR OPPORTUNITY - If the promoter urges you to join now because the program offers a "ground-floor opportunity" and it is urgent that you enter immediately to take advantage of this opportunity, BEWARE! Any program that offers substantial income opportunities only to those persons who become involved early in the promotion is, by its nature, an illegal pyramid scheme. Any legitimate marketing program will provide the same income opportunities to all participants, no matter when the participant joins.

"GOVERNMENT APPROVED" - If the promoter states or implies that an official government agency has sponsored, approved or certified the company, its marketing plan, agents, employees, representatives or products, BEWARE! Neither the State of Arkansas, nor the Attorney General’s Office, nor any other government agency approves or certifies any network marketing company, program, or product.

"IT’S JUST LIKE…" - If the promoter represents that the company or the network marketing plan is legal because it is similar to another, better-known company’s marketing plan, BEWARE! The legality of any marketing plan is judged by its own attributes, not the fact that the promoter compares it to another plan. Additionally, statements that because the sale of a product or service is associated with the marketing plan the plan is not an illegal pyramid scheme are not necessarily true. Even programs with legitimate products can be marketed in such a fashion as to violate the pyramid statute.

"JUST SIGN UP TWO" - If the promoter represents that all you need to do to have success in the program is to recruit a few participants and help each of these recruit a few more participants, BEWARE! If the overall emphasis of the promotion is the recruitment of other participants, as opposed to the sale of product or services to non-participants, it is highly likely that the program violates the pyramid law.

"BUY TO ENTER" - If the promoter states, suggests, or implies that you must purchase product in order to enter the marketing program, or that the purchase of product will enhance your likelihood for success in the marketing program, BEWARE! If the program requires the purchase of product, or the payment of any substantial fee, in order to obtain the marketing opportunity, it is likely that the program is a pyramid. Additionally, if the program requires subsequent payments or purchases in order to maintain or enhance the marketing opportunity, it is likely that the program is an illegal pyramid.

THE FINE PRINT - If the promoter makes any representations which differ in any fashion from the written promotional materials, BEWARE! All information regarding the marketing program should be included in writing in the marketing agreement. Read the agreement carefully before making a decision about participating in the program. If anything the promoter tells you is different from the written agreement, DON’T JOIN.

The existence of any or all of the above warnings in the program promotion could indicate a violation of the Arkansas Deceptive Trade Practices Act. However, these warnings are general in nature and may or may not apply to any given network marketing program. If you are considering joining a network marketing program, we suggest that you have the program reviewed by private counsel of your choice prior to joining.

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