Marie Richardson of Daytona Beach, Fla., has never been as excited about a business opportunity as she is about her new work for Fortune Hi-Tech Marketing. In her first week and a half as an independent sales representative this summer, she earned $800 in bonuses for recruiting four customers who agreed to pay a fee to become salespeople and buy or sell products.
Kimberly Asper of Missoula, Mont., however, says she sometimes has to feed her family cereal or ramen noodles for dinner since she was laid off from a job and spent thousands trying to build a business through Fortune. She soon realized it was all about “signing people up.”
Richardson was one of several thousand salespeople who gathered here last month for a Fortune conference to learn how to recruit people and sell products including cellphone service and private-label vitamins for the company, which Fortune’s top money earner, Ruel Morton, calls “the most lucrative financial opportunity in the history of the country.” Asper, meanwhile, was one of the Montanans whose complaints led to a lawsuit filed by the state securities commissioner and settlement that required Fortune to tell current and new representatives that no compensation will be paid for recruitment. Fortune paid $1 million to settle the charges, including $840,000 to reimburse Montanans, but did not admit wrongdoing.
Multilevel or “network” marketing pays commissions to salespeople for the products they sell, on products sold by others they recruit, and often bonuses when their teams reach a certain level of sales. The Direct Selling Association, which represents companies that have multilevel compensation plans, estimates there were about 16.1 million of these “direct” salespeople in the U.S. last year, up from 15.1 million in 2008, thanks to high unemployment and the need for many to supplement incomes. Avon, Amway and Mary Kay Cosmetics…