28 Jan

Why Multi-Level Marketing Companies are Pyramid Schemes

I often hear: “Pyramid schemes are illegal! If XYZ Company was a pyramid scheme, the government would shut them down!”

Yes, pyramid schemes are illegal. No, our government generally doesn’t shut down pyramid schemes masquerading as multi-level marketing.

MLM is a type of pyramid scheme that our government allows to operated. Is it ignorance? Or is it deliberate? I don’t know, but it seems that educating consumers is the best way to fight against pyramid schemes which try to hide the nature of their activity by calling themselves “multilevel marketing” or “network marketing” or “home based businesses.”

Watch this video to learn more.

2 thoughts on “Why Multi-Level Marketing Companies are Pyramid Schemes

  1. I have not verified this, but I read that the reason it’s legal was because of Congresspersons tied to Amway slipping it in an unrelated bill to delineate Ponzi schemes with “product selling” companies.

  2. Rachel – It is true that there are lobbyists who ensure that ponzi/pyramid scheme legislation exempts “direct selling” companies (i.e. MLM).

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