Is Your Business Opportunity Program Legal?

Introduction To Business Opportunity Programs

Business Opportunity Programs have always been very popular with many people. They offer the ordinary person the chance to make money from home without the usual costs of setting up in business

There is usually very little if any stock to buy, no overheads much to speak of, no investment in publicity materials etc – all these services are provided free by the program owners. Typically an online opportunity program will provide participants with banners, text ads, email ads, ezine ads etc – even a full website, all completely free

The only cost involved is a small monthly membership fee – although even this can be avoided until you get used to the program, as many programs will allow you to join for free

Do These Programs Really Work?

The honest answer in brief is – some do: many don’t!!

The first question to consider is whether the program is in fact legal

Many people down through the years, that business opportunity programs have been around, have lost money – sometimes all their life savings. For this reason most governments in western countries have passed laws to outlaw most of the worst kind of these schemes, often referred to as “Ponzi” schemes

However the law is often openly ignored by many of the people running these business opportunity programs. Perhaps they did not take appropriate legal advise before starting the program, perhaps they were unaware that what they were doing was illegal – or maybe they just didn’t care. For some people as long as they are making money, they don’t care that other people are losing money!!

However the critical point to grasp is that “ignorance of the law is not an excuse”, and any one that promotes a trading scheme, as an affiliate, is just as guilty as the people that run the scheme. In general you should always do your homework on the business in question as most of these type of businesses will not survive very long

A Pyramid Matrix

A pyramid matrix simply means an arrangement where the number of people in each level of the pyramid gets bigger the further you go down. Generally the number of members will increase by a set multiplier e.g. you start with 5 people, each of these people refers 5 people, so on the second level or tier there are 25 people, being 5 X 5. As you go down each level of the matrix you multiply the members by 5 each time. So the next level will be 25 X 5 members which is 125

The problem with this arrangement – and the typical one with business opportunities – is that this rate of growth is unsustainable. You would very quickly need one million people and more to sustain this matrix. In fact by the time you got down to the 9th level of this matrix you would need nearly two million people in the scheme – and each of these two million people would each have to find 5 members, which would then push the membership to 10 million!!

The General Legal Rule

For these reasons laws have been introduced to protect the public from such un-viable schemes

The general rule is that it is illegal to encourage someone to pay money in joining or participating in a trading scheme, if the only or main purpose of the scheme is to encourage other people to pay money by way of joining or participating in a trading scheme e.g. you join a scheme and pay a membership fee of $9.99 – you earn this money back when you find 5 other people to pay their membership fee of $9.99

Anything that breaks this rule is almost certainly illegal – you would be well advised – however enticing the scheme sounds – to stay well clear of such arrangements

Many business opportunity programs break this rule because people join as free members and then must “upgrade” their membership in order to participate in the compensation plan. However they receive nothing of substantial or equivalent value to the membership fee being paid. In other words if you pay $9.99 per month and receive free “training”, a “free” website, free “support” via a forum etc – none of these things can be regarded as being of “substantial or equivalent” value

The law regards these schemes as an illegal unregistered lottery, and anyone who promotes such schemes is engaged in an illegal activity – certainly not a legitimate business!

Product Based Opportunities That Have A Network Aspect

The way to make such money type schemes legal, is to always ensure that people are receiving something of value for their membership fee e.g. some real product or service which could be bought by the general public

Product based opportunities are fully legal because people join for free as “distributors” and can sell a range of products and earn a commission, based on the sales they generate. There may be an additional “add-on” network aspect, which may require the payment of a monthly fee. This payment is fine, so long as there is something of value provided for the payment, and so long as making the payment is not compulsory

Because product based opportunities are nearly always legal – providing there is a “join for free” option, then you can always have confidence that such businesses, based on selling a product or range of products, is a viable opportunity and will almost certainly last into the future

What Qualifies As A Product?

You need to be clear what is meant by a product

In general we are talking about a real physical product such as slimming pills, ski jacket, health drink, bedside clock, perfume etc. If the main purpose of the business is to sell the product – even if there is some additional network aspect, then you are generally on firm ground

The Network

We have mentioned the phrase “the network aspect” we need to be clear what is meant by this. We do not mean a standard pyramid matrix. The idea of network marketing is to allow for a system of network distribution – so that each member in the organization sells a small amount of product per month, but altogether this amounts to a much larger total value. However there is no requirement for people to participate in building a network if they do not wish to – they can just sell the products for their standard commission. Such a system will produce far greater group sales than the same number of people just paying a monthly membership fee.

Imagine if I have 100 people in my network all selling just $50 of product a month. That amounts to total sales for the group of $5,000 per month. But if those 100 people just paid a membership fee of $9.99 per month, the total revenue would be only $999. In addition, as each of those 100 people would be receiving a commission cheque for their $50 worth of sales, they would be much more likely to continue with the business, as compared to simply “losing” a membership fee of $9.99 with no commissions for their trouble


Be very careful about business opportunity programs. Product based opportunities work very well via a system of network distribution. However if there is no product of any significance, and you only make money by getting other people to pay a membership fee, then this scheme is very unlikely to pay you any money ever. With a product based opportunity you can sell real products and collect a trade commission even as a free member. As a result the business is viable and a network can be built up into a significant monthly income

Prepaid Legal Review – Learn What Your Upline Doesn’t Know and Can’t Teach You

Let’s review Prepaid Legal. They are a company, that for a monthly fee, one obtains a membership which provides legal counsel whenever necessary. Prepaid was founded in 1969 by Harland Stonecipher. Though it did not begin as an MLM company, it was recognized as such by the 1980s. By the late 90s, at prepaid Legal was considered the 33rd fastest-growing company on the NYSE.Prepaid is also the listed on Forbes 200 best small companies list.

So how does Prepaid Legal work? For around $300 per year, a customer purchases on annual membership. $17 and $26 monthly plans are available. These plans make available to you legal advice on everything from writing wills, buying homes or just be familiar with your basic legal rights. There are more than 60,000 legal forms on the website and members can utilize. Essentially, members use the phone number on their membership card to contact a lawyer that specializes in the area they need help in.Plans vary by state.

So why would anyone want to use Prepaid Legal services? It’s probably easier than panning through the phonebook looking for a lawyer’s number that you need. The company points out that only the wealthiest 10% of people use legal services on a regular basis, and since the rest of us don’t, we might be at a disadvantage.Is the service necessary?
My opinion is not important, since over 1 million people have decided is necessary.

If you want to have a Prepaid Legal business, there is little more that needs to be mentioned. Apparently, the only way you can join, is by filling out an application for enrollment through their website. It costs $49 to start up a business and this includes materials, training, support, Prepaid Marketing Services, marketing supplies and Online Associate Services. Prepaid Legal is very excited about their timing in this industry. They state they are at 2/10 of 1% of growth potential and don’t anticipate critical mass hitting until 2%. Critical Mass is when a company reaches a point where they grow tremendously in a short amount of time. In my opinion, a good time to join a company is before they hit critical mass.

I found a compensation plan a bit of a challenge to comprehend. Prepaid Legal Associates are paid in three different ways. The first way to get paid is by getting commissions on every membership to Prepaid Legal that you sell. The second way to get paid is when you sign-up other people into the business and receive commissions for that. The final way to get paid is via residual income on your team’s success. The part that confused me was that they pay on five different levels according to how many memberships you sell per month. Also, they pay you an advance commission for the annual memberships they sell. For example, if you sell a Prepaid Legal membership to someone, you get paid a years worth of commission. But, if that person cancels their membership before the year is up I will get what is called a “chargeback”. A chargeback is exactly what it sounds like it is. You have to pay back any commissions earned by member cancels early. I’m not a fan.

Traditionally, when joining a company like this, you’re going to be taught approach every person you’ve ever known and try to get them to either sign on as a member or join your team. Let’s face it folks, this is the hard way of doing things. Wouldn’t you rather talk to people that actually care about joining a network marketing company? Wouldn’t you rather use a pain-free, surefire way to gain success in this industry?

What is the Legal Definition of a Hostile Work Environment?

The hostility that exists in a corporate environment is actually counterproductive and eats into productivity because it sucks out any individual desire to make the office work together as a team, the hostility creates small pockets of a clique. The creation of an ingroup acknowledges the creation of an outgroup.

The corporate cost can be astronomical on two counts, the first is the sheer drop in productivity, employees who dread coming to work are not likely to brainstorm ideas. Instead they are forced into small cliques that maintain a hostile and disruptive stance.

The second cost is the individual stress to the employees. They suffer from headaches, hypertension and other real or imagined symptoms, that lead to them calling in sick. They are frustrated and the brightest will leave and find a more conducive working environment. The least able stay because they feel that they cannot get another job and their productivity and creativity is also reduced.

It is therefore in the employers interest to stamp out any hostile working environment, yet in many cases it is the bosses that fan the flames of this hostile environment. They force their staff into a position where they are isolated and frustrated.

The U.S. has an Equal Employment Opportunity Commission (EEOC) and they confer several legal rights to employees. The job of the U.S. Equal Employment Opportunity Commission is to enforce federal laws that prohibit employees being discriminated against. These laws protect both employees and prospective employees against employment discrimination. However whilst many people know that employment discrimination is a crime the details can be a bit fuzzy around the edges.

Employers are not allowed to show any kind of favor or discrimination on the grounds of

  • Race
  • Color
  • Creed
  • Sex
  • Ethnic origins
  • Age (over 40)
  • Genetic information.

However the issues can be slightly broader no discrimination against sex includes any discrimination against women for being pregnant. It also includes harassment by co-workers as well as employees on the above grounds.

Recently it was reported in the British press that a business told a prospective Conservative member of parliament that they would not be considered because the sight of a pregnant woman made him feel sick! American legislation extends to preventing retaliation when complaints were received on the above grounds.

However the laws are not necessarily clear cut because not all employees are protected, it does depend on the number of employees and the type of employment discrimination alleged.

Despite this any employee can lodge a”Charge of Discrimination” even if they are not protected In fact all discrimination lawsuits must be preceded by a charge of discrimination, unless the employee is filing for discrimination on the grounds of unequal. However there is a time limit against these charges and that time constraint is strictly enforced.

The charge of discrimination is what it says it is an allegation and there are no claims at all that the government agree Wit the charge. The Equal Employment Opportunity Commission, has a legal obligation to investigate the charge of discrimination. The Equal Employment Opportunity Commission has the power to force the employer to disclose certain records regarding their employment policy.

The next step in the process is the Equal Employment Opportunity Commission issues a right to sue, which gives the employee the right to take legal action against their employers’. The employee has a year exactly to procure the right to sue, but this figure is not always the same for government workers.

One benefit about discussions with the Equal Employment Opportunity Commission is the fact that there advice is both free and implies confidentially which means that you do not pay and they cannot take any action without your approval.

However it is crucial that you accept that their word is not necessarily written in stone – they may feel that you do not have any grounds to sue for discrimination, but a lawyer may well advise you differently. This is because defining a hostile working environment is by its very nature contentious. The Equal Employment Opportunity Commission tends to confine its definitions to the categories which are listed above and any other local laws, because they carry federal protection.

Sometimes that can leave you in a situation that you feel you have no options, and this is rarely the case. In most cases there are options, but you are not aware of those options. Pre-Paid Legal Services, which have a fixed low cost monthly charge provides phone consultations with labor lawyers.

Some cases are rejected because the employee has not stated to their employer that they are a victim of discrimination. However there may be valid reasons why an employee has failed to do that, they may feel that they will aggravate an already hostile working environment.

An employer has a legal responsibility to provide a mechanism for reporting experiences, that confers some levels of protection to their employees. It is often grounds of discrimination that this protection is not in place nor enforced. It is not enough to be there, an employer cannot pay lip service to this, they must make a situation safe for the employee to speak.

However some form of document is essential if only the alleged times and dates of the employment discrimination. never give your employee a letter or a document without retaining a copy. State clearly your objections and grounds of the discrimination and ask for the behavior to stop. Write down any actions from your employer in retaliation of the alleged discrimination and if possible provide witnesses. it is often best to speak to trusted colleagues outside of the working environment.

This has a two fold effect you feel less isolated and alone and are not treated as a pariah in the workforce. This reduces the stress a little. Also their is someone backing up your allegations.