Fudan University Presentation On MLM and Pyramid Schemes
Fudan University Presentation On MLM and Pyramid Schemes
Fudan University Presentation On MLM and Pyramid Schemes
AGENDA
1. Motivation for Interest: Current News and
2.
3.
4.
5.
6.
7.
Regulatory Action
Historical Thread: Traditional Direct Selling to
Multilevel Marketing
Fraud Connection: Ponzi Schemes to Pyramid
Schemes
Confluence: Multilevel Marketing & Pyramid
Schemes
Critical Issues in the United States
Present Actions and Inactions
Conclusions and Questions
FTC.gov
Marketing Downline
and Compensation Structure
Commissions/Overrides
Level 1: (15%)
Level 2: (10%)
Level 3: (5%)
Allan
/ |
\
B1 B2
Bill
/
C1 C2 C3, Cathy
John
|
A2
|
B4.
\
A3
B9
C26, C27
20
18
0.0120
16
0.0100
14
12
0.0080
10
0.0060
8
6
0.0040
4
0.0020
0.0000
0
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Fraud Connection
1920: Charles Ponzi nets $5K in February from
Source: Wikipedia
which they receive (1) the right to sell a product and (2)
the right to receive in return for recruiting other
participants into the program rewards that are
unrelated to the sale of product to ultimate users
Product-Based
Pyramid
Scheme
Wealth Transfer:
Recruitmentdriven investments
fund rewards to
current participants
Wealth Transfer:
Recruitmentdriven fees and/
or purchases fund
rewards to
current
participants
Legal Multilevel
Marketing
(MLM)
Single-Level
Direct Selling
witnesses
1,000 exhibits
7,000 pages
4 years
Amway found not to be a pyramid scheme
Amway Safeguards
70%
rule
10 customer rule
Inventory Buy Back
recruitment
when participants bought packages in part for internal
consumptionthe participants were the ultimate users
rewards BurnLounge paid for package sales were not tied
to the consumer demand for the merchandise in the
packages
Quoting FTC expert: pyramid scheme is an organization
in which the participants obtain their monetary rewards
primarily through enrolling new people into the program
rather than selling goods and services to the public.
Herbalife:
Thank You!