Pyramid schemes are illegal in all 50 states and in most countries in the world. The reason they’re illegal is because they promise extraordinary returns based on a structure that is unsustainable and will eventually collapse. In order to survive, pyramid schemes require an infinite number of recruits. Since there aren’t an infinite number of people, they always fall apart, leaving the people at the bottom of the scheme with empty pockets.
MLM zou op oneerlijke wijze misbruik maken van verkopers. Slechts enkelen winnen, maar de meesten verliezen. Dit is het gevolg van de piramidestructuur van MLM-bedrijven. De toenemende discussie rond MLM en directe verkoop leidden er in september 2014 toe dat het bedrijf Avon opstapte bij de Amerikaanse Direct Selling Association (DSA) waarvan alle grote Amerikaanse direct sellers lid zijn. Reden was Avons kritiek dat de ethische standaarden van de DSA niet hoog genoeg zouden zijn. Hierdoor zouden MLM-bedrijven met minder goede bedoelingen toetreden met negatieve uitstraling tot gevolg. Een jaar eerder had Tupperware met eenzelfde argumentatie al afscheid genomen van direct sales met verwijzing naar piramideconstructies bij malafide MLM-bedrijven.
Founded in October 2016, the LuLaRoe Defective/Ripped/Torn Leggings and Clothes Facebook group was initially intended for posting pictures of holey leggings. Now it has more than 30,000 members and has become a place for women to share pictures of ugly merchandise, screenshots of vicious consultant behavior, and to upload documents from the numerous lawsuits against LuLaRoe. (At last count, there are nine ongoing legal battles.)
A tipoff that should clue you into the wisdom of network marketing is that the companies themselves, who manufacture and sell the product, don't even eat their own dog food. They are making money the old fashioned way, by selling an expensive product. It's you whom they recruit to start a network marketing business. When an existing distributor pitches you and gets you to become a distributor yourself, you are required to make your initial purchase of "inventory" of whatever the product is. You either consume that product yourself or sell it to others. Your principal sales tool is the pitch that if your customers become distributors beneath you, they can buy the product at a discounted wholesale price. In most plans, in order to retain your distributor status and qualify for the wholesale discount, regular monthly purchases have to be made.
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