FTC Definition: Multi-Level Marketing Businesses and Pyramid Schemes
Most people who join legitimate MLMs make little or no money. Some of them lose money. In some cases, people believe they’ve joined a legitimate MLM, but it turns out to be an illegal pyramid scheme that steals everything they invest and leaves them deeply in debt.
United States Federal Trade Commission “Is This an MLM?” Lookup Tool
Learn whether a company is a multi-level marketing (MLM) company. MLM companies are often predatory on their members and learning that a company is an MLM early can potentially help prevent disaster.
The Behavioral Economics of Multilevel Marketing
Although MLMs are often compared to pyramid schemes, consultants argue that participation in a MLM allows them to make money outside of the traditional full-time labor force. This paper examines the law, economics, and psychology of MLMs, suggesting that MLMs may draw on prospective consultants’ cognitive biases in persuading consultants to join and continue a MLM. Consultants may be led to focus on unlikely benefits and to conform to notions of success that seem consistent with the “American dream” — even to their financial loss.
Heidi Liu, PHD student, Harvard University MLM Income Disclosures: When Average Does Not Equal Typical
Averages in MLM income disclosure statements are often atypical and, in fact, outliers relative to what most distributors experience. That MLM companies continue to report distributor incomes using averages demonstrates a lack of interest in providing meaningful information to current and future distributors. Recent FTC actions and statements highlight a growing concern for deceptive MLM practices.
Peter Vander Nat, PhD 2020 FTC MLM DATABASE
In 2020, TINA.org investigated the 16 MLMs targeted by the FTC for making deceptive COVID-related claims and found that each of the MLMs has continued to make unsubstantiated health claims and/or deceptive income claims, either directly or through distributors.
TINA.ORG FTC Puts Businesses on Notice that False Money-Making Claims Could Lead to Big Penalties
October 26, 2021 – The Federal Trade Commission is putting more than 1,100 businesses that pitch money-making ventures on notice that if they deceive or mislead consumers about potential earnings, the FTC won’t hesitate to use its authority to target them with large civil penalties.
FTC Exposing Ponzi and Pyramid Schemes
Multi-level marketing, or MLM, companies have been around for eons. They come in all forms and often the line between what is legitimate and what is not can be fuzzy. Some have been exposed by authorities who charge that they are pyramid or Ponzi Schemes. Others have been questioned by critics as to the true nature of the business. Here are some notable businesses and investment companies that have been in the news over the years.
TINA.ORG Pyramid Scheme? The 7 Definitive Questions to Ask
To ensure that you are not about to enter the tainted netherworld of a pyramid scheme, which could land you in legal hot water, make sure that you have answers to these seven money-related questions before you make any sort of investment.
TINA.ORG The Gathering Storm Over the Multilevel Marketing (MLM) Industry
Multilevel marketing (MLM) companies have long been a controversial business model, with critics accusing them of being nothing more than pyramid schemes in disguise. The MLM industry has faced increased scrutiny in recent years, with regulatory bodies taking a closer look at their business practices and some high-profile companies facing legal action. While MLM companies argue that they offer legitimate business opportunities, critics argue that they rely on a constant influx of new recruits to sustain their business model, leading to financial harm for many participants.
Prof. Bill Keep Proposed FTC rules target multilevel marketers, ‘dead-end debt traps’
“Consumers, workers and prospective entrepreneurs are being bombarded with so-called money-making opportunities that promise the world but leave them deeply in debt,” said Samuel Levine, director of FTC’s Bureau of Consumer Protection. “The FTC will use every tool in its toolbox to deter this economic exploitation and compensate people who got conned.”
Natural Products Insider US FTC to MLM: You Lie, You Pay
The US Federal Trade Commission (FTC) has been cracking down on multilevel marketing (MLM) companies that make false claims or engage in deceptive business practices. The FTC has taken legal action against several high-profile MLMs in recent years, including Herbalife and AdvoCare, and has ordered millions of dollars in refunds to consumers who were misled. The FTC’s actions signal a growing recognition that the MLM industry poses risks to consumers and that more oversight and regulation may be needed.
TINA.org via MoneyLife.in Four Reasons Why MLM Companies End Up In Court
Multilevel marketing (MLM) companies have faced legal challenges for years, with critics alleging that they operate as pyramid schemes or engage in deceptive business practices. There are several reasons why MLM companies end up in court, including false or misleading claims, lack of transparency about earnings, and the pressure to recruit new members to sustain the business model. Critics argue that MLMs prey on vulnerable individuals and often result in financial losses for participants.
Talented Ladies Club Regulating the Reluctant: Policies that Benefit Vulnerable People in Multi-Level Marketing
Better strategies that advocates against multi-level marketing companies can employ prioritize the needs of participants themselves—even when they perpetuate harm to others through their participation. By examining the class of people who join these companies, and the reasons they join, policymakers can craft solutions that hit at the underlying issues that drive people to MLMs. The best policy measures identify and seek to solve participant problems in regard to areas such as labor fairness and child care and avoid ineffective punitive measures against those participants.