How to Be Generous but Frugal

You’re proud of the frugal lifestyle you have adopted. Becoming a minimalist has served you well. You’ve become astute at tweaking your finances and your purchasing and spending habits to save money in little and big ways. So what are some ways you can continue to stretch your dollars by being frugal, yet not become egocentric, and maintain perspective that you are part of a much larger world, a world that you have the power to contribute to and make better for future generations? Can you be both frugal and generous?

The ABCs of balancing generosity and frugality:

Alter your time into money-saving assistance to anyone you can by volunteering.

Volunteer for anything and everything possible. You and your family can give to individuals or to groups. It’s a fun and rewarding family activity and a great way to teach children about generosity. Perhaps you have an elderly neighbor who could benefit from your help with their yard work. You’ll feel good about helping, not to mention the pride you’ll take in making their yard look as well maintained as yours.

You can schedule time for your family to cook at a soup kitchen or homeless shelter. It will be very humbling for your children to see that there are decent people who don’t have the means to live on their own, often because of some bad luck or unfortunate circumstances. Get other friends and families involved and make this a regular family event.

Coordinate a work party at your synagogue or church to perform tasks indoors or out. Your children can pull weeds while you are trimming bushes. Or they can dust shelves in the Sunday school classrooms while you are doing some touch-up painting. You all may learn some new skills while beautifying your place of worship.

Barter and become an expert at making the best win-win situations.

Organize a babysitting club with other families who have children the same age as yours. If you can assemble eight families, each can host the children one Friday or Saturday night a month for a sleepover and early breakfast, giving each family the remaining seven weekend nights as a break from child care. If that number of families seems too unwieldy, work with only three other families, each one hosting on one Saturday night a month. You’ll be pleasantly surprised at the friendships formed among these children as they grow to know each other.

Giving your time in exchange for someone else’s service or product helps everyone that’s involved. You can borrow your neighbor’s extension ladder to clean you gutters, but then offer to clean his also. Or maybe help a local proprietor in his shop in exchange for some goods; you might help the bike shop reorganize in exchange for a new bicycle.

Create useful items for others to personalize your giving.

Are you going to someone’s house for a party or dinner? Don’t spend an afternoon at the mall looking for the perfect hospitality gift. Instead bring something that you made. Bake some bread, making round or specialty loaves. Pick colorful flowers from your garden and decorate an empty jar for a vase. The gift of time is always a precious gift. Recipients of your homemade presents will be flattered that you took the time to personalize something exclusively for them.

Always remember your ABCs when attempting to balance frugality and generosity. It will cost you nothing in dollars and you’ll be able to go to sleep with a smile on your face. It’s a big and wonderful world out there and you have the power to offer your time and skill to make it a better place for your children and you children’s children. You’ll still have all the dollars you’ve learned to save. Try it!

This article by Debra Karplus first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


Why Credit Is Safer Than Debit

Credit and debit cards have been a growing form of payment in the United States for decades. Many Americans get one or both types of cards when they are teenagers. According to a study on federalreserve.gov, the amount of total credit card payments reached 33.8 billion in 2015, making credit cards one of the most common forms of payment.

Although credit cards are popular, debit cards are also widely used. The same study from federalreserve.gov found that the number of debit card payments reached 69.5 billion in 2015, which led it to have the largest payment number increase out of all payment types in the study.

With this increase of usage for both debit and credit cards, you may be wondering which one is safer to use. Many people, like millennials, are afraid of credit cards and their potential to accumulate debt. However, credit cards are generally safer to use on a regular basis than debit cards.

Fraud Protection

Unlike debit cards, credit cards offer protection against fraud, theft, and loss. According to millionmilesecrets.com, established law keeps credit card owners safe from unauthorized charges when their credit card is stolen, hacked, or lost. Because credit cards are used, and unfortunately lost, so frequently, credit card companies are prepared to deal with the crisis in a timely manner.

Debit cards, on the other hand, can cost an individual more if they are stolen or lost. When someone uses a stolen debit card, the card owner’s money is stolen upfront, making it very difficult to get any money back. For this reason alone, credit cards are better at protecting your identity and your money.

Although there are many ways to secure your cards and your identity, one of the best ways is to use an identity theft protection company. If you are unsure which company fits your needs, a helpful list of ranked and reviewed identity theft companies can be found at bestcompany.com. Even though credit cards are safer due to their fraud protection, it can never hurt to be prepared for the worst.

Disputable Charges

Some credit cards offer the ability to dispute charges. According to moneyunder30.com, making large purchases with a credit card is smart because if something were to go wrong with the item, the charges can be disputed with the credit card company to ensure that the card user doesn’t have to pay until the problem is resolved. With a debit card, there is an almost immediate money withdrawal from the person’s bank account, which gives the cardholder a difficult time getting money back if something goes wrong.

No Fear of Holds

Hotels, gas stations, and other institutions may put a hold on your account if you choose to pay with a debit card to ensure that you have enough money in your account to pay. These holds, according to clark.com, can be large and can be in place for days. Credit card users, however, don’t need to worry about holds or their money not going through right away.

Rental Transportation

In a few instances, you simply cannot use a debit card to reserve things, including rental transportation. Most rental car companies will not allow you to reserve a car without a credit card on file. This ensures that the car will be paid for and that renters will not lose money before they even get the car.

Overall, credit cards are the safer form of payment when it comes to American currency. Debit card and cash are fairly similar in the sense that debit card and cash owners can permanently lose their hard-earned money if the card or cash is stolen. Although many people are still wary of using them, credit cards can save time, energy, money, and worry in the long run.

This article by Alayna Pehrson first appeared on Best Company and was distributed by the Personal Finance Syndication Network.


Tax Season is Right Around the Corner — Check Out Our Tips for Planning Out Your Refund and Savings

You only file your personal tax return once a year. Depending on your situation, filing can be easy or complicated. Many people prepare and file their own returns, but the majority of consumers still seek help from a professional tax preparer. 

If you think you will need help preparing and filing your tax return in 2018, now is a great time to start making a plan. It’s also a great time to starting thinking about how you will use your refund if you’re among the 75 percent of tax filers who will receive one. 

Preparing to file

Before you file, find out what resources are available to you.

  1. You can generally get free tax preparation assistance by IRS certified volunteers at a Volunteer Income Tax Assistance (VITA) or a Tax Counseling for the Elderly (TCE) location if you meet any of these conditions:
    1. Your income is $54,000 or less
    2. You are 60 years old or older
    3. You have a disability or speak limited English
  2. This IRS locator tool will help you find a VITA or TCE site near you. 

  3. If your income is $64,000 or less, you can use a major tax preparation software product, offered through the IRS Free File Alliance, to prepare and file your return for free.
  4. If your income is more than $64,000, you can still download free tax filing forms through the IRS.
  5. If you’re a military member or military dependent, you can get free tax help from the Military VITA program.

Preparing to save

To help you follow through on a plan, identify a financial goal and make a plan to save your tax refund. Whether your goal is to set aside some money for unexpected expenses or you have a longer-term goal like saving for education or another major expense, here are three ways that planning to save can be helpful:

  1. It may help you focus on a financial priority that is important to you but that you may not have the money to pay for out of your regular income. 
  2. Once you identify a goal, it may help you to manage your other expenses and perhaps avoid overspending on things that are not priorities.
  3. If you don’t already have a savings account or another way to save, it will give you time to set it up so that when you file your return you can automatically direct the amount you want to save to that account. 

Saving at tax time can be easy and automatic. Your tax refund provides you additional income that is over and above what you receive in your paycheck, so it may provide a one-time opportunity to set some money aside. 

While you are filing your return

Through the tax filing process, the IRS helps you to direct money to up to three separate accounts and you never have to touch the funds. You can tell the IRS to send the amount you want to save to a separate account and to send the remainder of your refund to your regular checking account or other type of transaction account, such as a prepaid card.

Be aware of refund delays

Due to changes in the tax code in 2017, the IRS is required to hold any refund that includes the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until at least February 15. The IRS normally strives to issue direct deposit refunds for electronically filed returns within 21 days of filing. If you plan on filing as soon as tax season opens, usually in mid-January, you may have to wait a little longer to receive your refund if it includes either one of these tax credits.

Tips for managing the refund delay

  1. Prioritize all your essential bills like rent and utilities. Don’t rely on your refund to pay these bills if a delay will make you late.
  2. Try to pay cash if you are buying presents for the holidays. If you use your credit card for this and are planning on making a payment with your tax refund, remember that you may have to wait longer and could incur interest and late charges on your bill if your refund does not show up in time.
  3. If you get a little extra money from another source before the holidays, consider saving some of it so you have an emergency fund to fall back on if your refund is delayed.

 Tax frauds and scams 

Tax fraud—including when someone pretends to be you to steal your refund—is becoming more and more common. The IRS is taking a number of steps to reduce tax fraud. You can find out more information on how to spot identify theft at tax time in the Taxpayer’s Guide to Identity Theft.

Other resources

If you’re a tax preparer, we also have resources you can use to encourage taxpayers to save part of their refund

If you are getting behind on bills or having problems with debt, or if you are serving clients with either of these challenges, check our latest Your Money, Your Goals resources to help address these issues.

This article by was distributed by the Personal Finance Syndication Network.


Dept of Ed Puts Fraud First Over Students and Common Sense

Secretary of Education Betsy DeVos seems to be waging a terrible war against student loan debtors who have been defrauded by their schools in order to extract federal student loan money. Since the Trump administration took over the Department of Education has not actually delivered relief to a single Borrower Defense to Repayment claim. Yet they brag as of December 20, 2017 they have just approved “12,900 pending claims submitted by former Corinthian Colleges, Inc. students, and 8,600 pending claims have been denied.”

Under that Department of Education program the student previously would be forgiven from the student loans obtained by deception and the government would claw back the money the school got.

Most of these claims have been submitted by students of for-profit schools who played fast and loose with their marketing.

But it seems the government is turning its back on students who have been misled by schools to get their student loan money. Not only is the Department of Education changing the rules but they are also proposing rules that students who land better jobs after graduation should not be forgiven from the loans they were defrauded by. Either you are or are not a victim of fraud but the proposed policy create a middle ground where victims get to be only partial victims.

Under the deadline of “Improved Borrower Defense Discharge Process Will Aid Defrauded Borrowers, Protect Taxpayers” the government proposes what they say is more fair. Department of Education Secretary DeVos says “No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly.” But then goes on to say relief is conditional based on gainful employment. – Source

While the Department of Education brags about their recent wave of Corinthian College Borrower Defense to Repayment claims they also disclose “rather than taking an “all or nothing” approach to discharge, the improved process will provide tiers of relief to compensate former Corinthian students based on damages incurred.”

Relief from fraud will be dependent on the current earnings of the victims. Victims earning 70% and above of the income of their peers will only receive a 30 percent forgiveness of the fraudulent student loans. So to be clear, that income test is against the other students who were the victims of the same fraud and not the general population.

As a bonus the Department of Education gives fraud victims this carot “to mitigate the inconvenience for how long it has taken to adjudicate claims, the Department will apply a credit to interest that accrues on loans starting one year after the borrower defense application is filed.”

So the Department of Education will take forever to deal with the forgiveness application and then only tack on a year worth of interest while they drag their feet.

Please Sir, May I Have Some More?

Now to add insult to injury the Department of Education is proposing making it much harder for students to prove they were subject to misrepresentation to induce enrollment in an effort to extract money from students loan debtors.

The proposed forgiveness plan is to eliminate any successful judgment against a school by an Attorney General as proof of deception. Instead the individual student would have to obtain an individual judgment against the school. This would require a legal action that nearly all students would never be able to afford to file. Additionally the defrauded student would have to show clear and convincing evidence they were intentionally misled and that misrepresentation let to monetary harm.

“They’ve made it almost impossible for borrowers to meet the misrepresentation standard by requiring them to demonstrate the intent of the school especially when students don’t have the power of discovery” to examine the inner workings of a school, said Clare McCann, deputy director of higher education policy at New America, who worked on the Obama-era policy. “They took every dial and dialed to the far extreme. It really tries to make [the regulation] as useless as possible.”

Pretty soon we are going to need a Department of Education Victim Helpline to assist people soon to be screwed over by a government department that clearly appears to be putting for-profit colleges first.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Buying or Selling a “Smart” Home? Read This.

Whether you are buying or selling a home, think about the technology you may be buying or selling along with it. Many homes are now “smart” — featuring internet of things (IoT) devices such as connected thermostats, light bulbs, security systems, and energy saving appliances.

Here are tips for making sure you are prepared to sell a home equipped with smart connected devices:

  • List all the smart devices in the home. Some devices may be obvious to new owners — such as thermostats or refrigerators— but light bulbs or security systems may be difficult to detect as “smart” devices. Leave owner’s manuals behind for new owners, highlighting the smart features — especially for devices for which it may be more difficult to locate manufacturer’s information.
  • Remove administrative access and personal information for all connected devices in the home and then reset the devices. Cancel or change the account settings and logins. Reset the device to factory settings. This will protect your personal information and ensure the new owners can set up their own account, create new access codes, and set their own preferences.

And be prepared if you’re planning to buy a home equipped with smart connected devices:

  • Reset the devices and check to see what the current privacy settings of the connected devices are. Reset the device to factory settings. Review the privacy settings, and review the permissions and the settings for mobile devices that may interact with these devices.
  • Review the warranties and support policies on IoT devices. Do they transfer to the new owners? Since critical security updates may be necessary, new owners should create an account and update the devices as soon as possible even if the warranties don’t transfer.

We have additional tips on securing IoT devices.

This article by the FTC was distributed by the Personal Finance Syndication Network.

How Scammers Make You Pay

Here’s one of the top questions we get from people: Is this a scam? Whatever the “this” looks like, here’s our best answer to that question: Did someone say you can only pay by wiring money, putting money on a gift card, or loading money on a cash reload card? If they did, then yes: that is a scam.

Here’s a video that has, in a little more than a minute, some of the scam scenarios we see – and what you should do about them.

Whether someone tells you to pay to claim a prize, help someone out of trouble, or deal with tax issues from the (so-called) IRS: nobody legitimate is ever going to say you have to pay by wiring them money, getting iTunes cards, or putting money on a MoneyPak, Vanilla Reload, or Reloadit card.

So: watch the video. And if anyone ever insists you pay in one of those ways, tell the FTC. Because that will be a scam we want to know about.

This article by the FTC was distributed by the Personal Finance Syndication Network.

The Financial Diet

Many people have, at some time in their lives, gone on a diet to lose weight or to improve their health. Even if you haven’t tried dieting yourself, most likely you have seen advertisements, books, articles, and television programs offering helpful suggestions for people who are trying to develop new eating habits. Many of these same lifestyle changing tips can be used to help anyone who needs to put themselves on a financial diet due to an unanticipated change in their financial situation. A financial diet is also helpful for people who simply want to establish a savings plan for the future.

Establish a Plan

When beginning any type of lifestyle change, your chances of success are greater if you find a plan that works for you. Just as there are many types of weight loss diets, there are various methods of financial dieting. You may find that setting up a weekly or monthly budget is the best plan for you. Or, keeping a financial journal and recording all of your expenditures may help you be more successful at saving money. It is not the type of plan you choose, but rather, how committed you are to the plan that will determine your rate of success.

Educate Yourself

When dieting to lose weight, you usually assess your eating habits and make dietary changes that will help the pounds disappear. You take time to read labels, evaluate calories, and discover new, healthy, diet-friendly recipes. When you put yourself on a financial diet, you need to educate yourself and find ways to save money. You should reevaluate your insurance policies to see if you need to make changes and adjustments that can save you some money. You may need to find ways to lower utility bills by insulating your home, using energy efficient light bulbs, and make various other economical and environmentally-friendly choices. Just as with a food diet, small changes can make a significant difference.

Motivation

Any time you attempt to make a lifestyle change, you need something to motivate you as you progress toward your goal. If you have put yourself on a financial diet in order to save money for a future investment, such as a home, a college fund, retirement fund, or to save up for a vacation, keep a visual image of your goal where you can see it daily. If your financial diet is more circumstantially mandatory than optional, you can keep a more positive attitude about the tight budget if you do not put yourself in the position of feeling deprived. The key to successful dieting is often “everything in moderation.” When you are on a financial diet, allow yourself a few small indulgences along the way. This will keep you from feeling deprived and make the transition to a leaner budget a little more pleasant.

Discipline

When you are trying to break a bad habit, it is easier to do so if you find a good habit to replace the bad one. When you are on a shopping diet, you certainly don’t want to go to a place, such as the mall, where the temptation to spend is everywhere. Instead of spending time at the mall or at one of your favorite stores, find a place for a nature walk, engage in an exercise program, become a volunteer, find a new hobby, or take your dog for a walk.

Support

It is always helpful to have a support system when reaching for a goal or making a lifestyle change. Sometimes, when you experience the temptation to deviate from your diet, a friend or family member can steer you away from the temptation or remind you of the importance of your goal. They might even be able to share some of their frugal living tips and financial dieting strategies with you.

This article by Veronica Bowman first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


How Can We Ever Get Credit Card Debt Relief?

Question:

Dear Steve,

We are in over our head in bills.. 3 years ago we had a medical emergency with 3 of our children.. just when we think we are gaining the company my husband worked for made some major cuts in jobs and hours/trips.. We’ve borrowed so much, maxed out credit cards and just can’t catch up.

Amy advice on where to start to get on our feet again?

Amber

Answer:

Dear Amber,

There was a time when I was deep in debt, afraid, confused, alone, and depressed about the mess. I would expect you feel a similar amount of stress and anxiety over your situation.

But the biggest secret I’ve learned in the following 27 years is that you can’t let your debt define you.

The pressure that debt brings makes people do things that make no logical sense. People will borrow and borrow to make things better. It most often does not. Or others will turn to credit cards or loans to make ends meet. And that works for a period of time, until it doesn’t.

It’s no surprise that medical debt is the leading cause of bankruptcy. Once something happens, typically beyond your control, that alters the balance between income and making ends meet, then it’s only a matter of time before the situation must really be dealt with. In this case it took three years for it to hit the wall.

I don’t care what anyone might tell you, including yourself. You are not a loser or failure for finding yourself in this situation. Debt problems are really just simple math problems wrapped layers deep in emotion. It’s the emotion and perceptions of self-worth or self-esteem that cause most people to string out truly dealing with their debt.

Credit Card Debt Relief Vader

If we distill your situation down to the most basic components what we actually have is a situation that suffers from a massive debt explosion and a reduction in income. That math is never going to add up. Getting out of debt is either eliminating debt, increasing income, or a combination of the both.

Some Credit Card Debt Relief Truth

You may want to read “How to Get Out of Debt. The Honest and Unvarnished Truth” and “How Do I Get Out of Debt Quickly? Change Your Mindset.”

There is a seemingly never ending number of companies that would love to sell you some sort of magic debt relief wand but truthfully and honestly what you most need is a fresh start.

You need a way to end this ridiculous slide deeper into debt and have a shot of being able to live within your current income. That new financial life should also include saving money to build up your emergency savings account so you’ll have money on hand to deal with financial surprises. And you’ve also got to start saving for retirement as well.

Based on what you shared with me it seems very clear what you should look at first is to consider bankruptcy. This will give you a legal fresh start, protect you from your creditors, and give you the least expensive and fastest way out of debt.

There are three things I think you should look at to help you make an informed decision.

First, you should look at my online Get Out of Debt Calculator and compare your debt relief options.

Second, you should read “How to Find a Great Bankruptcy Attorney” and don’t just leap at the first attorney you talk to. Most bankruptcy attorneys offer free consultations so start scheduling a few appointments.

Finally, you absolutely need to realize bankruptcy will help you to do better financially, and faster. Most people think that can’t possibly be true, but it is. Read “Those That File Bankruptcy Do Better Than Those That Don’t.”

Please post an update for me in the comments and let me know what path you decide to choose and how things are going.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

FedLoan Servicing Screwed me Over on My Public Service Loan Forgiveness

Question:

Dear Steve,

I was misled by FedLoan Servicing regarding my loans under Income Based Repayment. I was told I was in the program for PSLF and worked for nearly 6 years at a non-profit. I left that non-profit to join another and was ready to have all debt forgiven in October 2017. Instead I was told that I have 4 years remaining as the time at the initial non-profit does not count because at some point the loans were consolidated into one, which I was told needed to occur but was never told it restarts the 10 year clock!

Are any class action suits occurring regarding the PSLF program? Or any Senators getting involved? Do I have any recourse for the PSLF program?

Josh

Answer:

Dear Josh,

Hopefully you have some evidence of the bad advice and information FedLoan Servicing gave you to use to validate your claims.

To be eligible for Public Service Loan Forgiveness you had to have all your loans consolidated into a Direct Consolidation Loan. It makes the most sense to then elect to repay your loans with some graduated or income based repayment option otherwise on the standard payment plan you’d wind up repaying your consolidated loan in 120 payments anyway.

I’m no longer shocked that some servicer gave bad advice. But the problem runs deeper than that. The Department of Education outsourced the Public Service Loan Forgiveness servicing to FedLoan Servicing and has said in court documents the word of FedLoan Servicing is not to be relied upon. Read Public Service Loan Forgiveness Program Teters With Unmitigated Disaster.

The Department of Education says, “You may have received loans under other federal student loan programs, such as the Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program. Loans from these programs do not qualify for PSLF, but they may become eligible if you consolidate them into a Direct Consolidation Loan. However, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated them don’t count.” – Source

Your issues are somewhat aligned with the facts stated in the suit filed by the American Bar Association over the Public Service Loan Forgiveness program.

Even when student loan debtors have regularly submitted the Department of Education recommended Employment Certification Form on a regular basis to confirm their employment qualifies for forgiveness, the Department of Education says any determination by their contractor FedLoan Servicing, can’t be relied upon.

The government says, “The Department of Education (Department) has created a system by which individuals can obtain provisional guidance on whether their employers are qualifying employers for PSLF as they work towards making the 120 qualifying payments. Under this system, individuals file an Employment Certification Form (“ECF”), and FedLoan Servicing—which provides services for this program under a contract with the Department—responds with a notification regarding the employer’s status.” – Source

And the hidden gotcha in the program is making the 120 payments alone is apparently not sufficient, “Once a borrower has made 120 qualifying payments, she may submit an application for PSLF and an ECF to verify that she is employed with a qualifying public service organization. AR 179. The borrower must be employed by a qualifying public service organization at the time she submits the application for loan forgiveness and when the balance on the loan is forgiven.” And who knows how many years it will take to grant final approval after the forgiveness application is submitted.

So even if you made 120 qualifying payments you may still not be granted forgiveness if your employer is not considered to qualify when your forgiveness application is finally approved. And that fact was not lost on the American Bar Association who noted, “Significantly, the borrower’s prior ECF approvals would not be reconsidered in this situation such that her past employment would be retroactively stripped of its qualifying status. Rather, in such a scenario, the Department’s decision would bear on whether the borrower has met all of the final qualifications for loan forgiveness, including being employed in public service at the time she submits the forgiveness application, not whether her prior ECF-approved employer(s) qualified under the statute and regulation.” – Source

Your situation is very similar to that faced by the Plaintiffs in the American Bar Association case since “the denials’ retroactive application had the immediate effect of wiping out what Plaintiffs believed in good faith to be years of qualifying payments toward obtaining loan forgiveness. The Department gave Plaintiffs every reason to believe that it had accepted and recorded payments for many years.”

Bottom line – the PSLF program is a mess and there appears to be no evidence forgiveness will be granted or even what the actual process is since the Department of Education keeps changing the rules.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

FTC Staff Offers Business Guidance Concerning Multi-Level Marketing

The Federal Trade Commission staff has released business guidance to help multi-level marketers (MLMs) understand and comply with the law.

Although there may be significant differences in how MLMs sell products or services, core consumer protection principles apply to all MLMs. Among other things, the business guidance explains how the FTC distinguishes between MLMs with lawful and unlawful compensation structures, how MLMs with unfair or deceptive compensation structures harm consumers, and how the FTC treats personal or internal consumption by participants in determining if an MLM’s compensation structure is unfair or deceptive. The guidance also addresses how an MLM should approach representations to current and prospective participants.

The guidance explains that an FTC determination as to whether an MLM violates the law involves a fact-specific evaluation and a careful investigation. It also states that orders against individual MLMs are not binding on the entire industry, but the provisions of these orders may provide useful guidance.

This article by the FTC was distributed by the Personal Finance Syndication Network.