ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, August 22, 1996 TAG: 9608220025
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
FOR EXAMPLE, warning bells should go off if commissions rely more on recruiting others than on sale of the product.
On July 19, Virginia Attorney General Jim Gilmore issued a warning to Virginia consumers about the dangers of participating in possible pyramid promotional schemes for telephone phone cards.
Gilmore did not mention any specific company but said promotional schemes that had recently come to his attention involved sellers of phone cards and resellers of long-distance services.
Consumers, Gilmore said, should know that multi-level marketing plans for phone cards and long-distance resellers may not be licensed by the Federal Communications Commission or the Virginia State Corporation Commission.
A spokeswoman for the SCC said Wednesday that the agency neither regulates phone cards nor accepts complaints about them.
Among the things that Gilmore said consumers should consider before becoming involved in any multi-level marketing scheme are:
* Whether the number of salespeople at lower levels are too numerous to allow reasonable earnings at all levels.
* Whether statements about earnings possibilities or the number of customers are substantiated in writing.
* Whether the emphasis is on selling a product or on recruiting other people and bringing them into a program. The primary focus should not be on earning commission by bringing others into the program but on earnings from sales of products to consumers, Gilmore said.
* That the number of levels a marketing plan contains does not necessarily determine its compliance with state laws.
* If oral presentations about the program differ from written material.
* Whether the company requires large or monthly purchases of the company's products with no regard to whether distributors can sell the products in a reasonable amount of time.
LENGTH: Short : 43 linesby CNB