HELENA — The Office of Montana State Auditor, Commissioner of Securities and Insurance has announced that multi-level marketing companies operating in Montana have until Dec. 15 to report their failure of registering for a reduced fine of $1,000.
Multi-level marketing (MLM) companies can appeal to those looking for extra cash or become financially independent, but MLM’s operating in Montana must register and failure to register can cost up to $5000.
An MLM sells or distributes goods through agents or distributors. They can also compensate participants based on sales or purchases or even recruitment of new participants and sellers.
“So, what we do through this process is we look at the plan when an MLM registers with this agency to make sure that it doesn't cross that boundary of acting like a pyramid scheme, “ said Troy Downing, the Montana State Auditor.
Downing says that pyramid schemes are illegal in the Treasure State, and since 2013 the state has worked to take down such schemes.
“In our role in consumer protection is to find those ones that are crossing the line and figure out what we need to do to either have them cease and desist or modify to the point where they are in compliance with state regulation,” said Downing
There are more than 1,000 MLMs operating in the US and only around 15 MLM’S registered with CSI. Downing is hoping to have MLM’S come forward to register and pay the 1,000 dollar fine.
"We have until December 15th Amnesty and once we get through that amnesty period we're going to continue prosecuting, and the prosecution is going to be and the prosecution is going to be a lot worse than just, you know, coming forth and getting registered,” said Downing.
The filing requirement is for the company itself. Participants and people selling on behalf of the MLM do not have to file.
Downing also says this program is designed to protect consumers.
“Montana Law, which is designed not to make it difficult to do business, it's designed to protect consumers and we can't look into these if we don't know about them,” said Downing.
CSI will also publish a full list of registered MLM's on their website after the program has ended.