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These things are illegal because if - as in a dream world - they really worked, by time one person had attained level number five, he would have "signed" everybody on face of earth with only first two levels receiving any of money. There would be nobody left for third, fourth and fifth levels to sell to...
Multi-level marketing companies get around law by stating within their by-laws that it is strictly forbidden to promote or attempt to sell program by mail. Then, when postal inspectors come calling on little guy, MLM company says: He did it - we don't do such things - here, look at our by-laws.
The bottom line is as old as hills: you can do anything you want - legal or illegal - so long as you don't get caught - but when you do get caught, you'd better be prepared to pay price.
Besides terrible mess multi-level marketing has gotten a lot of normally law-abiding & moral people into, it has "foisted" upon these people personality changes that man of them do not like.
To make any money selling a product or service on a commission-only basis, you have to have ability to sell like proverbial "used car salesman". It's all hard sell, and more often than not, involves "forcing" prospect to buy whether it's good for him or not.
Anyone who has ever attempted to succeed in commission sales, knows that it takes a product in great demand - a great deal of sales calls, advertising and persistence - at least a little bit of failure - and a tremendous amount of "total business moxie" to make any money at it.
There's nothing wrong with commission selling - and if you're good at it, you're good at it, you can make a lot of money if this kind of selling - but remember that multi-level marketing is commission selling - way "distributors" are recruited is very illegal, with authorities closing down more MLM companies every day - and it takes a special kind of personality to succeed at it.
Article by Jay Harris of IMI Concepts. Visit his website http://www.5linx.net/l171966/makeMoney.asp