I’ve always been skeptical of claims that the multilevel-marketing business model can make people piles of money. To be an elite seller and recruiter you have to be constantly on the prowl. Every family member, friend and casual acquaintance is a potential customer or convert to the business.

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MagnifyMoney.com, a Web site that helps consumers compare financial products, recently surveyed 1,049 multilevel-marketing participants involved with at least one company over the past five years.

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The survey found that most people were making less than 70 cents an hour in sales, and that was before deducting their business expenses.

Nearly 60 percent of respondents said they earned less than $500 over the past five years.

“Our conclusions show that most participants could earn significantly more money in exchange for a lot less time and money invested if they were employed in a minimum wage job,” reported Brittney Laryea, a writer at MagnifyMoney.

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I was working with someone who was involved in a multilevel-marketing business. He was convinced it was going to make him a millionaire. Not even close.

I had him calculate the amount of time he was spending on the venture and the money he was spending to buy the products he was trying to sell. Turns out he was making less than minimum wage.

For more results of the MagnifyMoney survey, read: Vast Majority of Multilevel Marketing Participants Earn Less Than 70 Cents an Hour

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Network marketing counts on the multiplication factor. You may be selling, but for many of these businesses the big bucks come from recruiting others. You become a distributor and in turn recruit other distributors, who then recruit their own team. The higher up the line you get, the more money you earn.

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But many people can’t recruit enough folks and they end up spending a lot of their own money. As Laryea points out, “Recruits are often expected to purchase ‘starter kits’ or inventory to start selling products, which also earn the recruiters (and the recruiters’ recruiter) commission. Thus, multilevel marketing as a business strategy incentivizes participants to grow a sales network underneath them, also called a downline.”

There’s also the debt.

Nearly 32 percent of multilevel-marketing participants said they financed their involvement in the business using a credit card, according to the survey.

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“The financial burden of success in multilevel marketing may encourage participants to rack up debt to attend conferences and training or pay for marketing materials and other expenses related to involvement,” Laryea writes.

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Two years ago, the Federal Trade Commission forced Herbalife to restructure its business over complaints it misled people about how much money they could make as part of its multilevel-marketing company. The agency said the overwhelming majority of distributors who pursue the business opportunity earn little or no money.

The U.S. business operations had to pay $200 million to compensate consumers to settle the FTC charges. The settlement also required Herbalife to reward participants for what they sell, not how many people they recruit.

Read about the case: Money back for 350,000 Herbalife distributors

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You also have to be careful that you don’t get involved in an illegal scheme.

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There are legitimate multilevel-marketing businesses, but there are also illegal pyramid cons in which people make money by getting recruits to invest their money, which is then funneled up to earlier investors. Eventually the pyramid collapses because it gets harder to attract new money.

You may end up making money in this type of business, but before you sign up make sure you understand what you’re getting into.

Read more: What to Know Before Getting Involved in an MLM Company

Color of Money question of the week

Have you been involved in a multilevel-marketing business? If so, were you successful? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line, put “Multilevel Marketing.”

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Let’s talk about your money. I’m live at noon (ET) today to take your personal finance questions.

It’s also “Testimony Thursday,” so share with me your success stories. Have you paid off debt? Did you finally reach your emergency fund goal?

To join the live discussion, click this link.

Should you use home equity to pay off your credit cards?

Forty-four percent of homeowners think it’s fine to use home equity to consolidate debt, according to a new survey by Bankrate.com. And another 12 percent of respondents thought it was okay to use home equity to invest.

In last week’s newsletter I asked: If you’ve tapped your home equity, how did that work out for you?

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“I have taken out a home equity loan, used it to pay off credit cards, and then run them up again,” wrote Judy. “I’ve gotten my spending under better control. I don’t have any credit cards open, and I have nearly paid off my home equity loan, and my two credit lines are also almost paid off. It feels good to be out from under all that debt!”

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Diana Bendit of Virginia has used a home-equity loan to pay off a car. I “reduced the interest I would have to pay by more than half and paid it off faster with less cost. If someone is paying 8 percent and can reduce that to 3.5 percent over the same time frame using a home equity loan, that is a no brainer to me. I wouldn’t roll that debt into a refi because the payments over 10 to 30 years are not a good deal. The only reason to do this is to reduce interest payments and pay off the debt faster.”

“We decided to take a cash-out refi to pay off unsecured debt,” wrote Kimberly Rotter from San Diego, a personal finance writer and frequent commenter. “The debt was incurred for emergency maintenance on our property, including several months of lost income for my husband while he did the work. Our home was 100 percent paid off so this was a very hard decision for us. However, our alternative was to do the zero percent shuffle on multiple credit cards to handle $85,000 in debt, which I know from past experience is difficult (although possible) at that level. We got a loan against the house for 5 percent and have a very strong and committed 36-month payoff plan. The pain of this choice will hopefully keep us on track. I am optimistic that we will meet our payoff goal.”

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John Heenehan from Madison, N.J., said he and his wife tapped their home’s equity to adopt two girls from China.

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“We had little savings (but no other debt) and each adoption cost about $30,000,” he wrote. “It was risky but we figured, at worst, they could foreclose on the house but not our kids. By the way, Pearl and Jade are our family jewels. Best investments we ever made.”

Anthony from Florida said he and his wife took out a home equity line of credit more than 30 years ago as “just in case” money.

“Fast forward 10 years or so from the home equity line of credit losing, after we had paid off our home mortgage, we were in the process selling our home and purchasing another home,” he wrote. “We had to close the unused line of credit. We had to get a satisfaction letter to move forward with the new home purchase. We were fortunate that we never had a need to tap into the line of credit for any purpose, including educating our children. While a home equity line of credit may be beneficial and perhaps needed by some we simply decided to live within budget and never had to use [it] for any purpose.”

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Mark Konold from the District asked: What about using a home-equity loan to get rid of student loans?

“Are you better off consolidating all of that long-term debt, with one payment and a lower rate (assuming your rate isn’t increased) backed by an asset whose value appreciates (in theory)?” he asked.

Color of Money Columns This Week

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