No illegal content
As well as ensuring that any advertising on your site is not illegal, you need to ensure that all content is legal. Common on a large number of TE’s are games of chance. Lotteries, if not licensed, are illegal.
“Each of three elements must be present to constitute a ‘lottery’, namely, a prize, distribution of the prize by chance, and consideration for the opportunity to win the prize.”
I’ll break that one down because, if you haven’t taken the time to learn legalese, it’s not the easiest sentence to understand.
To be a lottery, the three following elements have to be present –
Distribution of the prize by chance
Consideration for the opportunity to win the prize
Where “consideration” is anything of value, frequently money or effort – in our case credits (generally obtained through money or effort).
The “Distribution of the prize by chance” is the clincher. If through money or effort you purchase the chance of winning a prize but you may not necessarily win a prize then it is a gamble (lottery – naughty). If the outcome is always going to be a prize, even if you don’t know what that prize may be, then it’s not a gamble – you are going to get a prize (bonus/reward – nice).
More from mlmlaw.com listing definite no-no’s for your site –
“When analysing a program for legal compliance, companies must take stock of their in-house and field practices to ensure it’s not treading in the same minefields as those that have fallen before them.
So where do the mines lay? Here are the most common:
Income claims! It comes as no surprise that deceptive income claims top the list. The FTC has attacked such claims for years as they are one of the primary means used to recruit new prospects. Note that the term “deceptive” precedes the term “income claims.” Not all income claims are improper; the key is presenting proper disclosures to support the claim so that it is not deceptive.
Product claims. Again, no surprise here; we’ve seen unsubstantiated product claims attacked since the days of the wagon-drawn snake-oil salesman! Unfortunately, people don’t seem to learn. No product will cure everything from AIDS to zits, nor will it increase a car’s mileage by 300%, and everyone will not become a millionaire by following an infomercial real estate course. Anyone who claims their products will do these or any other unsupportable things should not be surprised when they receive an FTC Access Letter or a Civil Investigative Demand.
Testimonials. Testimonials are a unique category of product claims. Although they have been around forever, in the last few years they have become more aggressive than ever. The FTC has been cracking down, but it seems as though they are trying to plug a floodgate with a cork. Nevertheless, those who are indiscriminate and cannot substantiate the claims made in testimonials run an increased risk of regulatory action.
Late commissions. It’s deceptive to say you will pay someone on a given date, and then fail to do so. You may have a bit of leeway if a problem results from a computer glitch or something out of your control, but not much.
Job offers. When recruiting for prospects, a network marketer is not offering a job. They are seeking independent contractors who will go into business for themselves. Recruiting by leading people to believe that you are offering a job is unquestionably deceptive. Don’t let it happen in your company.
We could go on as the huckster’s imagination for deception is seemingly limitless. But the above are common practices every network marketing company should look out for in its own internal practices and the conduct of its distributors. Sure you need to pay attention to the structural elements of your compensation plan to ensure its legality, just don’t lose sight of the fact that it is everyday deceptive conduct that really catches regulators’ attention and presents a much easier target”