The multi-level marketing scheme had been around us for quite some time. The first company that has introduced MLM to the internet is BurnLounge. The company lasted for 2 years until it had lost its case. Regardless of the BurnLounge case, not all MLM companies are deemed illegal. Amway is one of the successfully operating MLM networks that runs under legal terms. Some legal MLM networks are now run by software like Malaysia MLM software to ensure proper and safe operation of the network.

The BurnLounge Case

For anyone who listens to BurnLounge speakers, they were encouraged to open an online digital store of music is the key to riches. The marketing of digital music store indeed made the founders lots of money. They are at the top of a pyramid scheme that was later on tagged illegal. The money that the founders made was not from a single sale but from people who want to be digital entrepreneurs in the music industry. It was reported that more than 90% of those invested in the network have not recovered from their investments or even come close to what was promised an easy gain.

The MLM company shut down after the FTC filed a court case in 2007. In 2011, the judgment was served that BurnLounge and its preceding officers had operated and managed a pyramid scheme that purposely deceived people into false beliefs and investments. BurnLounge made an appeal, however, lost again. Recently, the FTC announced that they will be sending out a total of $1.9M to consumers who have invested money in the BurnLounge Scheme. And while BurnLounge continues to make an appeal, their website is frozen but shouting out to get ready for BurnLou

False Advertisement

BurnLounge took advantage of the statement “selling music, selling opportunity”. The same strategy would have worked if they have a better plan that will allow investors to earn as what they have stated in their speech. Nonetheless, FTC said that upon looking into their marketing plan, it was well designed so that not one of the members will hardly get back what had been invested.

Presented the evidence demonstrating that 94 % of BurnLounge members suffered losses, why would the business support this sort of rigid defense? You cannot assume all mlm is unlawful under US legislation; the truth is, the milestone 1979 case on Amway produced some forms of MLM industry clearly legal. That event received a differentiation between legitimate mlm systems and unlawful pyramid plans. That differentiation is continually drawing fire from critics, who point out that it is a distinction with no difference.