We’ve all been there—happily scrolling through social media when suddenly, someone you’re not particularly close with slides into your DMs with a “Hey Hun, I’ve been thinking about you, girl!”, randomly strikes up a conversation, and the next thing you know, they’re trying to recruit you as part of their “tribe” selling everything from essential oils and candles to weight loss programs and “buttery soft” leggings.
Yes, it’s the insidious “totally not a pyramid scheme” world of Multi-Level Marketing. Awareness has grown recently over the potential pitfalls and predatory practices that often surround MLMs, thanks to the popular Netflix documentary LuLaRich and whistleblowers like TikTok influencer Roberta Blevins.
Legislators in New Jersey have taken notice, too, and they’re putting forth legislation to establish penalties for MLM companies that engage in bad practices. On Monday, February 13th, the Assembly Financial Institutions and Insurance Committee will consider A5093 (the companion bill, S3449, has been referred to the Senate Commerce Committee).
The bills seek to regulate the practices associated with companies engaged in Multi-Level Marketing. If these bills become law, it will be a violation for any person recruiting others to participate in an MLM to make false statements or intentionally misrepresent:
- the MLM company they’re working with
- the amount or nature of the income they’ve earned with the MLM
- any other “material fact relating to” the MLM
Even better: the MLM rep must disclose the profit or potential profit that they stand to gain by recruiting you, and they’re not allowed to make false or unproven claims of health benefits of the products they’re selling, including deceptive “before and after” photos and/or false stories of the merchandise’s effectiveness.
The bill also calls for the Division of Consumer Affairs to publish a web page warning of the dangers of MLMs, and establish a process for consumers in NJ to file complaints about MLMs.