Orrin Woodward LIFE Leadership Team

Winner of the 2011 Independent Association of Business Top Leader Award; Orrin Woodward shares his leadership secrets.

Network Marketing & Scams

Posted by Orrin Woodward on September 12, 2008

How do you separate a legitimate Network Marketing company from the various scams that develop from time to time?  The discussion today is centered on the difference between legitimate network marketing companies and the illegitimate companies that attempt to fly under the network marketing banner.  It is possible to have a legitimate company where distributors are building in an illegitimate way.  I am not a lawyer and this is not legal advice, but merely my opinions from spending 15 plus years in the industry.  Let me share the 5 key principles that make up a legitimate company in my opinion.


1. A legitimate product that has true end users, not just consumption from people interested in making money from the compensation plan. – The FTC clearly ruled that the product should have true customer demand whether there was a pay plan or not.  A simple test would be to determine if you love the product enough to use whether you were compensated or not.  This ensures the value proposition of the product is right so that the networking company does not mark the price up outside of the value range.  This protects the distributors and customers against a company interested in enhancing their own profits to the detriment of their distributors.  If the product has no demand outside of the network, then you are probably entering the danger zone.


2. Protection against inventory loadings. – No one should be hitting new levels in the networking field by buying products and loading them into your garage or basement.  If the networking company or field leaders are encouraging massive product loading – they are entering into the illegitimate zone.  A good product ought to have real demand that allows distributors to hit new level through the normal building of the business.  If all of the pin winners have loads of product sitting in inventory, then you are probably entering the danger zone.


3. No heavy pay to play requirements.  – The entrance fee should not be exorbitant where the main incomes are being made from “headhunting fees”.  If it cost thousands of dollars to get started, you are probably entering into the danger zone.


4. Keep the main business the main business. – Training and sales aids are critical and necessary to the building of a stable and profitable community.  Without proper training and leadership, a community will not hold together in the long run.  There may be profits created through the proper use of training materials.  A legitimate enterprise will share those profits with the field leaders in a fair and equitable way.  If the profits from the training become higher than the profits from the business, then you are probably entering the danger zone.  A good rule of thumb would be that profits from training ought to be around half of what you make from the network marketing company. 


5. No hidden non-competes or other anti-competitive practices in the contract – A legitimate company understands that people should be free to join or leave depending on whether the network marketing company satisfies the distributors and customers.  If they do not satisfy the customers, why would people stay with their failing enterprise?  To force people to stay in a business where they are not getting the results they desire in their life is not free enterprise and is not good for an industry that claims distributors are “independent” and “owners” of their own business.  Why would a legitimate company require fences to ensure the community stays in their business?   If there are legal fences in place to force people to stay in the network marketing company’s business then they probably are entering the danger zone.


I love the MonaVie Team because the way we build the MonaVie business is in line with the proper use of all five principles!  The MonaVie Team’s goal is to build a million people community through serving our distributors and customers.  Anyone is free to come or go based upon our ability to serve them.  We are building a TEAM where Together Everyone Achieves More.  How many true teams have you been part of in your life?  The MonaVie Team has some of the best leaders in the country and is Having Fun, Making Money and Making a Difference!  God Bless, Orrin Woodward

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