multilevel marketing scheme

Herbalife Under FTC Investigation? Or Not?

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ftc-bureau-of-consumer-protectionToday the New York Post reported that Herbalife (HLF) is under investigation by the Federal Trade Commission (FTC), and that has sent the stock price down more than 10%. The newspaper bases this story on a Freedom of Information request done by the newspaper. It says, regarding consumer complaints received by the FTC:

The FTC redacted some sections, saying it didn’t have to divulge “information obtained by the commission in a law enforcement investigation, whether through compulsory process, or voluntarily …”

And The Post says that other complaints by consumers had notes referring to a “pending law enforcement action.”

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Inline Marketing Scam: Same MLM Scam, Different MLM Name

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Through the years, multi-level marketing companies and MLM distributors have played a clever game of changing the wording to hide the truth. MLM activities have been referred to as direct sales, dual marketing, network marketing, multilevel marketing, consumer direct marketing, affiliate marketing, seller assisted marketing scams, home-based business franchising, and referral marketing. (Skeptics refer to this “business model” as pyramid selling, pyramid schemes, pyramid scams, endless chain recruiting, and Ponzi schemes.)

Why all the names? To confuse potential customers and recruits. These companies know negative impressions are associated with multi-level recruiting and sales. So if they can change the name, maybe they will get to people who would otherwise be turned off by the name MLM.

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