Montana State Auditor and Insurance Commissioner Troy Downing spoke to KGVO on Tuesday to let consumers know about the possible risks of multi-level marketing or MLM’s, especially those that don’t comply with Montana law in registering with the State Auditor’s office.
“We’re looking at multi level marketing programs, and we have a code on the books that requires them to register with this office, and the problem is that very few of them do,” said Downing. “There’s a bunch of them operating in the state and we’ve got about 10 of them that have registered. So we’re starting to crack down on those that haven’t.”
Downing described an average multi-level marketing operation.
“The multilevel marketing company is essentially a business that’s set up where you sell or offer some service to a network of customers or friends that you create,” he said. “And then they do the same thing and you get a piece of the business that they do and a piece of the business that their network does and it all kind of trickles up.”
Downing said it’s very important to know the difference between a legitimate multi-level marketing business and a pyramid scheme.
“The fact is on a typical pyramid scheme, there