Strategies: Is multi-level marketing a good choice for you?

— -- If you're an adult and you're breathing, there's a pretty good chance that sooner or later, a friend or acquaintance will approach you with a chance to "start your own business," "be your own boss," "become an independent distributor."

What you'll get is a pitch for a type of business referred to as multi-level marketing (MLM) – although it may be called by other names, including network, direct, affiliate, or matrix marketing. (Because these schemes get such a bad reputation, the companies change names to make them more attractive.)

Should you try it? After all, you may not have a lot of other choices, especially if you're out of work. And your friend is very persuasive. They tell you how much they love the products or services they sell, how supportive the people in the program are, that they've made thousands of dollars. They'll offer you a chance to start your own business for less than $199.

It's going to sound really good. You're going to be tempted. Should you give in to temptation?

In a word: NO. Stop and read this first!

Let me explain how MLM or network marketing works and how it differs from regular sales or a regular business.

•Single-level sales:You go out and sell a product or service and you either get paid for your time, or more typically, get a commission on the amount of product or services you sell directly to customers.

•Multi-level programs:You go out and recruit other participants. You make money not only on the sales you make but on the sales of those you recruit.

Sounds great, right? In reality, MLM programs rank high on the list of fraud schemes, and the Federal Trade Commission (FTC) and most states' attorney general have warnings and multiple lawsuits against many MLM programs.

That's one of the reasons that it's so cheap to get in: Many states regulate "business opportunities" requiring more than $200-$500 initial investment. To stay under the radar, most MLM programs keep under that threshold.