Government Sources

In this section you can access external links of The Federal Trade Commission and different state attorney generals in responds to multilevel marketing (product based pyramid schemes). You will notice very convoluted language on this matter. You will notice the condemnation of illegal pyramid schemes which are straight money based, and as they condemn illegal pyramid schemes they indirectly condemn multi-level marketing in principle (..if it looks like a duck, it quacks like a duck). To justify Multilevel marketing they bring up nonsensical points that conflict with the multi-level marketing platform. Such examples include condemning the infinite expansion of recruits of illegal pyramid schemes and at the same time mentioning legitimate MLMs don't focus on recruiting internally but the sale of products to outside recruits, which is far from the truth. These articles have mixed languages and some make valid points exposing the flaws of MLM. These articles show that the legal existence of product based pyramid schemes through extensive lobbying doesn't exist with rationality.

Consumers are on their own for evaluating MLMs. At best these government sources would only display a half truth, but would not give the full picture of MLMs. There is no consumer protection from the financial harm of MLMs. Unlike franchises MLMs are not required to disclose any financial information that would make it obvious, proving a financial trap with data of loss rates, average incomes or operating cost. 

 Federal Trade Commission 

- This article struggles to make a solid distinction between a multi-level marketing and pyramid schemes (because in principle there is no distinction). The points that try to validate MLMs don't exist, or hardly at all because the MLMs platform is contradictory to promote outside retail sales.This article is evidence that MLM existence from aggressive lobbying don't exist with logic and sound reasoning.

Summarizing Comments
(Click for Link)

- See list of various articles. Articles include various companies and the predatory targeting practices of Latinos

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(Click for Link)

 New York Attorney general

(Click for Link)
Summarizing Comments

- Highlighted Quote: "A legitimate multi-level marketing company emphasizes reliable products or services. A pyramid scheme uses products or services to disguise its quest for collecting money from the investors on the bottom levels to pay other investors further up the pyramid."

-(PSTC Comment) MLMs ARE pyramid schemes that launder products to recruit investors at bottom levels to pay upper levels. 

 California Attorney General

(Click for Link)
Summarizing Comments

Highlighted Quote:

"If an opportunity has one or more of the following, it could be a pyramid scheme:

  • You make money mainly based on how many people you recruit and the money they pay to join, instead of through sales of products to the public. This is the number one sign of a pyramid scheme."

 Florida Attorney General

(Click for Link)
Summarizing Comments

- This article states 5 points on how to choose a multilevel marketing company. Those points are valid questions to ask, however with further research of those questions beyond the article, you will find out MLM is a flawed model. In the link those reasons to support MLM are nonsensical. This article avoids the fact ALL MLMs are about recruiting rather than selling as well as avoiding the fact it is inevitable market saturation will happen from MLM. 

 Illinious Attorney general

MULTILEVEL MARKETING    

Things You Should Know About..

(Click for Link)

- This article represents 7 valid problems of multi-level marketing and the IL attorney general seems not as pro-MLM as some others.

 

There is no registration requirement for MLMs unlike franchises. Why are MLMs are not obligated to disclose certain financial data, unlike franchises. MLMs can keep certain information to themselves away from the public. For example, average earnings per distributor and loss rates.

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 INdiana Attorney general

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- This article fails to mention that in principle MLMs are pyramid schemes however makes a valid point that "Multi-level marketing plans paying commissions based on sales by lower level distributors may eventually result in a financial loss due to a reduction of new distributors joining at lower levels."  The word may needs to be crossed out in the article since the lost rates are close to 99.9 percent.

 Washington Attorney general

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Summarizing Comments

Highlighted Quote: "No. This office does not endorse or approve any marketing program. Anyone who says that their program is approved by the Attorney General is engaging in a deceptive act."

Ask why would this article even mention the quote above, unless MLMs or pyramid schemes actually made those false claims on a frequent enough basis

 FBI (Federal Bureau of Investigation 

The Corporate Psychopath

By Paul Babiak, Ph.D., and Mary Ellen O’Toole, Ph.D.
(Click for Link)
Summarizing Comments

Highlighted Quote: "There also is the risk for economic crimes to be committed. For the corporate executive and the criminal justice professional, the issue is the possibility of fraud. Today’s corporate psychopath may be highly educated—several with Ph.D., M.D., and J.D. degrees have been studied—and capable of circumventing financial controls and successfully passing corporate audits."