Are Secret MLM Business Development Deals Fraud?

As Business For Home we are Hard-Core Network Marketing Activists, and we believe in this industry, because of the many benefits. Personal development, the opportunity for many people to earn additional income, fun, and the list goes on and on.

The world of Network Marketing has unfortunately a controversial side, “Secret Business Development deals”,  in most cases offered by desperate weak companies.

It hurts the entire profession

This are deals for “Top Leaders” to come over to a Network Marketing Company and are not disclosed to the other distributors. They are not available for a “newbie” or a hard working stay-at-home mother or father.

A great opportunity does not need Business Development Deals….

The deal offered can have components as:

1. “Bridge money” a fixed amount of $xxxxxx  per month for a certain period.
2. Placing an existing downline under a “Top Leader”.
3. Soften the compensation plan, so that a person always qualify.
4. Additional benefits, such as “3%” extra over your total group revenue.

The MLM attorney Kevin Thompson stated about Secret Business Development Deals:

“People can mince words and say it’s not “fraud.” The word “fraud” carries with it criminal connotations. At BEST, it’s deceptive. The plan is marketed in a certain way and it’s implemented in another.

It’s clear-cut consumer law: if it’s a material fact, it has to be disclosed. Absent disclosure = misleading.”

It’s not an “investment” in leadership, it’s an un-creative scheme to deceive an audience i.e. “look at this leader that’s doing so well in our company.” Companies that do this are generally starved for cash, which is not a good sign and they need a quick hit.

It leads to an addiction on growth, which has unintended consequences. It worked for Jeunesse, but Jeunesse was able to (a) handle the litigation; and (b) generate revenues outside of America to out-run the risk. Most companies can’t do either.

These sorts of deals are seldom worth the expense. The leader is being incentivized to raid from his/her prior organization.

BDAs (Business Development Agreements) are structured to where leaders have to generate massive amounts of volume in a short amount of time. The companies that use these deals know what they’re doing: they’re incentivizing leaders to raid. This puts those leaders in legal jeopardy when the former companies sue. In most cases, they do not get sued because the numbers are not worth the hassle. In some cases they do.

I say all of this knowing that these sorts of deals are not going away. Cash-strapped companies need the juice and as long as the distributors are willing to take the risk, these deals will keep happening.

These sort of deals further soil the industry, btw. People think they’re building a stable income only to watch people flee to other companies via BDAs. When downlines dissolve like cotton candy, it’s not good for longevity. The industry is learning this the hard way right now.”