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MLM Code of Ethics

Written by: Christine Sutherland

Article Overview: Although MLM or network marketing has great potential for benefit over a range of contexts: financial, economic, social, educational and philosophical, it has largely failed to live up to the promise, partly because it has attracted swindlers and con artists in droves, but also because it has not made use of proven business strategies. This code not only protects potential recruits, but also ensure the sustainability of MLMs who commit to it.

MLM Code of Ethics

Despite the fact that the MLM business model has the potential to provide enormous benefits across many areas: financial, economic, social, educational and philosophical, it has largely failed to live up to its promise. In our view this is because in many cases the commission structure itself promotes greed and stupidity, there has been too much involvement by people with criminal intent, there has been an enormous lack of real business expertise, and there has been totally insufficient debate on principles and ethics.

In seeking to play some part in redressing this situation, the following code is compulsory for companies who wish to be listed as preferred MLM opportunities on our site. That is, no company will be listed as “recommended” without written commitment to this code and there will be no exceptions made for any reason.

There is no fee for listing, and no monies may be received for commission on product sales or recruitment as a result of such listing. However companies should be aware that their application for listing will be presented to objective 3rd parties such as the Better Business Bureau for comment and that listing cannot proceed when there is any significant unsettled legislative or litigation issue pending.

Application requires the submission of the full names of founders, directors and majority shareholders and listing will not proceed where such persons have convictions for white collar or organised crime, or where there are or have been any known links with organised crime whatsoever.

CODE OF ETHICS

1 Our compensation plan is fully explained prior to recruitment, and remains transparent and accessible to all recruits and potential recruits.

2 A net earnings statement is made available to our members at least annually, and this statement accurately records net earnings of all members, such that members are able to see for themselves what the true earnings are. (Earnings are calculated at commissions minus cost of product purchases, or any other purchase from the MLM company, such as training material, marketing material, etc.) The full intention of this statement is that existing and potential recruits can readily identify the true financial benefit, or otherwise, of joining this MLM company. The statement must be accompanied by certification by a qualified, 3rd party auditor. The earnings table will take the form of the following table:

x persons (X% of total A) earned >$580,000 (X% of total B)
x persons (X% of total A) earned >$300,000 (X% of total B)
x persons (X% of total A) earned >$200,000 (X% of total B)
x persons (X% of total A) earned >$100,000 (X% of total B)
x persons (X% of total A) earned >$50,000 (X% of total B)
x persons (X% of total A) earned >$25,000 (X% of total B)
x persons (X% of total A) earned >$12,000 (X% of total B)
x persons (X% of total A) earned >$5,000 (X% of total B)
x persons (X% of total A) earned >$1,000 (X% of total B)
x persons (X% of total A) earned $zero
x persons (X% of total A) made a loss

Where total A = the total number of people who were registered as recruits in that 12-month period, and where total B = the sum total of all net distributions from product sales and recruitment in that 12-month period. This information must also be provided graphically via a chart.

3 We desist from making promises or assertions that members will earn any particular income and we do not promote our MLM company as a way for people to make money quickly. We do not use images of wealth which are unrepresentative of the majority of consultant earnings (as per the table above) in order to attract new recruits.

4 We offer only those products which objective research verifies as beneficial. We will not involve ourselves with products or services which are based on false assertions or claims. We describe our products truthfully and accurately, and product pricing is set at a level which is acceptable to the market.

5 We do not offer products for which there is little demand, nor do we offer products in a market which is already saturated. Where we claim demand for any particular product, we provide objective 3rd party market research as evidence. When we reach a diffusion rate of 97% in any market, we immediately place a ban on recruitment, allowing recruitment only at attrition rate.

6 Our prime focus is on product sales, not recruitment. We understand that for any company to be sustainable it must continue to sell product, and it must not over-supply the market with consultants. For this reason, the major portion of commissions paid will always be on product sales, not recruitment. Over 51% of all product payout goes to the person who directly sold the product; ie, the person who did the work. We do not pay for a reward for new recruits, because we know that this leads to unsustainable downlines. We are committed to building quality, sustainable downlines, that are successful in delivering product to the consumer, generating real value for everyone.

7 We do not make members purchase training material, but we may recommend they pursue business studies with organisations competent in that area.

8 If we require product purchase by new recruits, such products will made available at a discount equivalent to the commission due on that product, or at a lesser price. We do not seek to profit from those who join our business. Similarly, no commissions are paid to upline for product sales to their downline.

9 We do not require recruits to purchase product if we launch an untested product into the market. We will not allow our recruits to bear the brunt of product development.

10 If recruits/members are required to purchase marketing material, such material is provided at cost.

11 If we charge an entry fee to any recruit, that fee shall be no more than the market value of that particular consultancy at that time. Market value is determined by an objective 3rd party, such as a business valuation service, bank or other financial institution qualified to make such an assessment. We affirm that we are selling a real business, not mere hope.

12 We do not allow our recruits to promote the product or opportunity to friends or family, nor do we allow unsolicited sales activities of any kind. These activities are counter-productive to the development of a bona fide, sustainable business, and bring disrepute to our industry. We do not allow our recruits to communicate via advertising, newsletters, mail, blogs, emails, or in any form, in any way that detracts from the professionalism of our company (ie; exhortational advertising and wild claims are strictly forbidden). We do our best to ensure that any advertising by our consultants is of a high professional standard.

13 We have developed a proven strategy for product sales and recruitment, which we provide full training and support in.

14 We teach our recruits how to plan, schedule, document, track, measure, analyse and refine their marketing strategy. We actively prohibit false representation, pressure tactics, or unethical business practices. We promote fair and honest dealings with customers and downlines at all times.

15 We treat our recruits with respect at all times, and encourage an environment of learning, co-operation, and kindness. We do not tolerate sexism, racism, ageism, or homophobia and we have written protocols in place to protect all personnel, consultants, and customers from such abuse.

16 We require our consultants to display honesty at all times, and to totally refrain from exaggeration or deception of any kind in their dealings with customers and with each other. We expressly forbid our consultants to sell or recruit by stealth. Our reputation is of vital importance and we rely on our consultants to present an image of which we can be proud.

17 We respond to complaints promptly, fairly, and respectfully and fully co-operate with all authorities in the event of legal disputes.

18 If and when a consultant decides to leave our company, we will refrain from blame, will seek not to disadvantage, punish or harm that person in any way, will be respectful of his/her choice and do our utmost to end our association on the best possible terms.

19 This code, along with a statement testifying our commitment to it, is displayed prominently on our web site and is contained in the information pack given to recruits/members.

What do you think of this code? What are your views on MLM or internet marketing?

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