UK Multi-Level Marketing


INSIGHT
Published
Jun 10th '21
Share
Facebook

Multi-level Marketing (MLM) is a way of selling goods and services where the profit isn’t just made from the products themselves, but also the recruitment of new people into the company.

 

Companies that follow this model but do not sell a product are likely to be considered Pyramid Schemes, and are illegal in the UK. Any marketer with concerns that their company may be operating this kind of business model is advised to seek independent legal advice.

 

MLM posts are advertising

Most MLM companies have individual sellers or representatives who advertise their products on social media, along with posting opportunities for others to join the company. Sellers are reminded that where they post content that falls within the remit of the Advertising Code, they will be considered the advertiser, and will be responsible for that content complying with the Committee of Advertising Practice (CAP) Code. See also: Remit: Social Media.

 

Product ads

MLM companies can sell a variety of goods and services, from beauty products to food supplements to party supplies, and sellers need to ensure that they hold evidence to substantiate any objective claims they make in their ads. See also Misleading Advertising.

 

However, there may be rules around particular products that also need to be adhered to. Sellers should ensure that they are aware of any rules surrounding the products they are selling, as they are responsible for their own ads. Detailed below are useful guidance links relating to some of the most popular MLM products:

 

 

Recruitment ads

Social media posts encouraging others to join an MLM are likely to be viewed as recruitment advertising by the Advertising Standards Authority (ASA). These also need to follow specific rules. For instance, any earnings claims marketers make in their recruitment ads need to be representative of what the average person can earn. CAP understands that, generally, those partaking in MLM opportunities are likely to earn differing amounts, and so would advise against quoting any direct figures in ads. Claims such as “you can earn a profit” are likely to be acceptable, provided the seller can prove that the average person can make some sort of “profit”.

 

Marketers should also ensure that they do not exaggerate the availability of any added incentives, such as holidays and cars.

 

Furthermore, sellers should also ensure that they include all material information in their ads – that is, all of the information someone would need to know in order to make an informed decision about whether to join the MLM themselves. This means making clear (for example) the nature of the opportunity, joining fees, starter kit fees, etc.

 

See also Recruitment: General and Guidance pack for MLM Sellers – Recruitment.

 

Testimonials

Any testimonials that are used in MLM ads are the responsibility of the seller – and the seller needs to hold documentary evidence that a testimonial or endorsement used in a marketing communication is genuine and hold contact details for the person who, or organisation that, gives it (rule 3.45). Furthermore, sellers need to hold evidence for any objective claims made in any testimonials, as they have adopted and incorporated the testimonial into their advertising. See our guidance on Testimonials and Endorsements for more information.

 

Promotions, giveaways & prize draws

Sellers are reminded that any promotions, including competitions, prize draws and giveaways, need to adhere to Section 8 of the CAP Code. For example, sellers need to ensure that they include all significant conditions for their promotion in the actual ad (such as a closing date, geographical or age restrictions, and how to enter). Any seller looking to run this kind of promotion on social media (or elsewhere) is encouraged to review our guidance on Prize DrawsCompetitions and Promotional Marketing prior to marketing their promotion.

 

Source: CAP

 

Read: How to #boss multi-level-marketing ads with these top tips

 

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the ASA. CAP’s AdviceOnline entries provide guidance on interpreting the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.

 

How can we help!

LS Consultancy are experts in Marketing and Compliance, and work with a range of firms to assist with improving their documents, processes and systems to mitigate any risk.

 

We provide a cost-effective and timely bespoke copy advice and copy development services to make sure all your advertising and campaigns are compliant, clear and suitable for their purpose.

 

Our range of innovative solutions can be tailored to suit your unique requirements, no matter whether you’re currently working from home, or are continuing to go into the office. Our services can be deployed individually or combined to form a broader solution to release your energies and focus on your clients.

 

Contact us today for a chat or send us an email to find out how we can support you in meeting your current and future challenges with confidence.

 

Explore our full range today.

 

Contact us

 

 

Why Not Download our FREE Brochures! Click here.

 

Call Us Today on 020 8087 2377 or send us an email.