0
$\begingroup$

I've been doing lots of research on pyramid schemes, and the rebranding and institutionalization of the industry in the 1980s with trade groups, heavy investment in politics, etc.

The term "multilevel marketing" (MLM) has been adopted as a legitimate class of business in the United States, since being created by verifiable pyramid schemes as a term used to legitimize their work and distance themselves from the earlier (and legally problematic) term of "pyramid scheme".

I'm wondering, are there are any MLM companies that are not also pyramid schemes?

$\endgroup$
7
  • $\begingroup$ You need to define “pyramid scheme.” If it’s based off a legal definition, then that depends upon the legal jurisdiction. $\endgroup$ – Brian Romanchuk Dec 12 '20 at 20:57
  • $\begingroup$ That's an excellent point @BrianRomanchuk and I think part of what makes an answer nontrivial. Let's go with the "value creation" definition, that a legitimate company, as opposed to a pyramid scheme, creates a product or products that outperform(s) other products, or is more efficient in some way, while a pyramid scheme is just money transfer $\endgroup$ – TheEnvironmentalist Dec 12 '20 at 21:02
  • $\begingroup$ If it’s just a money transfer, that would run afoul of the law in many countries (based on my understanding). Most MLM’s operate within the bounds of the law - otherwise they would be ex-MLM’s. $\endgroup$ – Brian Romanchuk Dec 12 '20 at 21:20
  • $\begingroup$ @BrianRomanchuk Plenty of businesses run afoul of the law, but given finite resources to pursue litigation against them, it's not very helpful to use which are pursued as an indicator of which are illegal $\endgroup$ – TheEnvironmentalist Dec 12 '20 at 21:27
  • $\begingroup$ You ask “ are any MLM companies that are not also pyramid schemes?”. If they haven’t been shut down, in what sense are they a pyramid scheme? I don’t see how an economics Q&A website can make determinations of that sort. $\endgroup$ – Brian Romanchuk Dec 13 '20 at 3:10

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.