"Many people still fall for new forms of network marketing, multi-level marketing (MLMs) and other organizations that, despite their products, strongly resemble pyramid schemes. However, Claudia Groß (Radboud University) and William Keep (College of New Jersey) discovered that scientific research is remarkably lenient in its assessment of this business model. This may be because much of the research in this area is funded by lobby organizations, the researchers write in a paper published today in the Journal of Marketing Management."
"For example, participants and organizations behind MLMs often lie about how much money you can actually earn, and in many ways they have the structure of pyramid schemes, because you spend money on products you cannot sell and on services that yield little return. You earn money mainly by recruiting others, but in doing so you recruit your own competitors,"
Many people are recruited into modern network marketing and MLMs with promises of earnings from unique products or courses, but actual income typically depends on recruiting others, not sales. Most participants lose money after spending on unsellable products and low-return services. Legal and marketing literature identifies multiple legal risks, including misleading earnings claims and illegal product claims. Academic assessments of MLMs often underplay these risks, possibly linked to industry-funded research. Social media now targets vulnerable young people with expensive courses and schemes involving dropshipping and cryptocurrencies, causing significant financial losses.
Read at Phys
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