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Can The FTC Manage MLM Fraud?

Uncategorized November 18, 2014

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wonder if all MLM companies must inevitably be pyramid schemes. I
wonder why regulators have failed to control behaviors found in
pyramid schemes and seemingly endemic to the MLM model, two
structures so functionally similar as to prompt early FTC action
(see

Below I argue that: 1) industry critics, business journalists,
the Direct Selling Association, and even MLM companies recognize an
ongoing potential for fraud, 2) regulatory action and inaction,
primarily by the FTC, demonstrates an unresolved tension between
managing (i.e., decreasing) fraud and preserving the purported MLM
“business opportunity,” and 3) an apparent inability to resolve
this tension led to a national failure to provide a reasonable
level of consumer protection against MLM fraud.

Below I argue that: 1) industry critics, business journalists,
the Direct Selling Association, and even MLM companies recognize an
ongoing potential for fraud, 2) regulatory action and inaction,
primarily by the FTC, demonstrates an unresolved tension between
managing (i.e., decreasing) fraud and preserving the purported MLM
“business opportunity,” and 3) an apparent inability to resolve
this tension led to a national failure to provide a reasonable
level of consumer protection against MLM fraud.

 

 

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