Commissioner Downing’s MLM Amnesty Program Ends Tomorrow

csimt 2021, Fraud, Press Release, Securities

Commissioner Troy Downing announced today that 18 additional multi-level marketing companies (MLM) have filed with the Office of the Commissioner of Securities and Insurance (CSI) following the announcement of the Commissioner’s amnesty program.

“This is a win for Montana consumers. By filing with our agency, we can review the company’s application and confirm that they are not running an illegal pyramid scheme.” Commissioner Downing said, “Our agency has given non-compliant MLMs an incentive to file through an amnesty program that expires tomorrow. We will hold non-compliant companies responsible if they do not comply with Montana law.” 

On November 9, Commissioner Downing announced an amnesty program for MLMs who have not filed with the State. Under the amnesty program, MLMs that come forward by December 15, 2021 and self-report their failure to file will receive a reduced fine of $1,000. Otherwise, an MLM could face up to $5,000 for each year they fail to file. MLMs have been required to file with CSI since 1999. If the company is a member of the Direct Selling Association (DSA), the MLM does not need to file with the CSI. At the time of the amnesty program announcement, 14 MLMs were registered with the CSI.

“The amnesty program was successful in getting MLMs registered. Our team at CSI did an incredible job putting the amnesty program together, working with stakeholders, and getting this information out to the public.” Commissioner Downing continues, “Multi-level marketing is not illegal in Montana if you comply with Montana law. Our agency is tasked with fighting securities fraud and financial exploitation. MLMs are required to file so our agency can take a look into their business model, compensation structure, and practices to ensure Montanans are not being taken advantage of.” 

The difference between an MLM and a pyramid scheme is generally the compensation structure. Montana law defines a “pyramid promotional scheme” as a sales plan or operation in which a participant gives consideration for the opportunity to receive compensation derived primarily from obtaining the participation of other persons in the sales plan or operation rather than from the sale of goods or services by the participant or the other persons induced to participate in the sales plan or operation by the participant.

Montanans doing business, whether selling or buying, with an MLM should check to ensure the company has filed with the State by going to CSIMT.gov/Securities/MLM or by contacting the CSI at 444-2040.