If MLM’s are widely seen as modern day pyramid schemes. Why are they not considered to be illegal?
In: Economics
Long convoluted story. Some people did a really good podcast on how it happened called The Dream
https://www.stitcher.com/podcast/stitcher/the-dream/e/56394469
They exploit a loophole in the laws because they can function as a normal business. You can just make money by selling herbal supplements, or whatever the MLM’s product is. So in theory, you could just be good at selling their product and not need to engage in the pyramid scheme elements of the MLM. But in practice, most people get caught up in that side of things.
Industry lobbyists and activists have pressured the government to pass bills that ostensibly crack down on pyramid schemes, but in reality carve out massive exceptions for MLMs.
Your premise is flawed. They are not the same thing. They are similar but one is illegal and one is not. A Pyramid scheme usually doesn’t involve the selling of actual products for one. A pyramid scheme is strictly a scam, an unsustainable structure of recuiting people and that’s it. MLM is similar with the recruiting, but they’re actually selling a product and making money come in, it’s not unsustainable, sketchy yes, illegal no. MLMs are only “widely seen as a pyramid scheme” by people who don’t know the definition of both terms and think they’re the same thing.
Edit: downvoted for taking time to answer your easily googlable question, wonderful.
E: here’s an article detailing the differences. But keep downvoting me sure https://www.diffen.com/difference/MLM_vs_Pyramid_Scheme
MLMs are very much like pyramid schemes in one respect, you’ll only really make any decent money if you recruit more people under you and get them to do the same.
But the big difference is there is no promise that you’ll ever make any money. They make sure of that. They pay lawyers a ton of money to make sure they never legally promise any kind of returns.
I know this because for a few years I worked as a convention graphics operator in Vegas. That’s a fancy term for “the guy who makes the power point computers work”. Just over half of the shows I did were MLMs. I’ve seen a *ton* of MLM presentations. It’s all just a big show. They do their damnedest to convince you that you can make a ton of money, but again, they never legally promise it to you.
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