Is MLM Legal? Is MLM Ethical? Is MLM just a Scam?
The definition of “legal” is “Authorized by or based on law.”
Yes, MLM is LEGAL! (and no MLM is not a scam)
Says the U.S. Federal Government.
In 1975 the Federal Trade Commission accused and sued Amway Corporation for operating as an illegal pyramid. After four years of litigation the court ruled that Amway’s multi-level-marketing program was a legitimate business and not a pyramid scheme.
Perhaps there was a time prior to 1979 that someone could say, “MLM is a scam! It is an illegal pyramid scheme!” And they might have been correct because MLM hadn’t been tested and adjudicated in court. But since 1979, only the uneducated can claim that the MLM industry is illegal.
This does not mean that ALL companies that claim to be an “MLM company” are legal. But, the INDUSTRY OF MLM IS LEGAL.
Now that the “legal” issue is stated and known, there’s also a logical, ethical and professional issue that needs to be addressed.
To answer this, let me first answer the question, “What is business?” If you were to ask this question of an academic (a professor or teacher) he or she would probably answer that business comes down to “supply and demand.” But I personally disagree with this thinking. To me, business is “making someone’s life better.” My theory comes from the logic of why I personally reach into my wallet and pay for something. It’s not based on there being a supply of something (because there are a lot of things I don’t buy), but rather that I think what I’m going to buy is going to make my life better in some way.
I don’t know what “guide” or “rule” policy makers and those who write laws follow when they rule in favor of or against a particular business. In other words, do judges and policy makers use some fundamental guiding principle such as “supply & demand” or “to make someone’s life better” to determine a legitimate or illegitimate business, or is it an arbitrary opinion? Is it based on how many lobbyists talk to Congressmen or Senators?
I bring this question to your attention so that you can think logically about any business or employment you seek. I don’t know what you personally use as a guide of what businesses are good, professional or ethical. Ask yourself what makes a good business? Have you decided that a “professional business” is one where the people wear nice suits and have a nice building? Is a “good” business only one that is legal? Is a good business only one that is profitable? No! That is not logical at all.
Only a business that does make people’s life better should be considered a “good, ethical, and/or professional” business. In comparison, a business that hurts people should be considered a “bad” and “unprofessional” business.
With that, I ask, “How can a business that manufactures a device designed to destroy thousands of people at once (such as a nuclear bomb) be an “ethical” business? How can selling a substance that kills 500,000 people EVERY year (such as tobacco) be a “good” business? How can we view a scientist who approves a drug to be sold, but is responsible for 150,000 to 200,000 deaths a “professional?” How can a “law” that strips an average of $359 dollars annually from every American family (such as state lotteries), disguised as a quick way to “make millions” but with the chances of winning at 0.0000002605, be “ethical?”
I was recently studying an MLM company whose “business plan” is to feed hungry children. At current date the MLM company and their 6600 distributors have donated 95,771,944 meals to hungry children. WOW! Only an insane person (or one with an axe to grind) would claim an entire mlm industry is a scam and unethical .
Now, don’t think this web site is only going to say good things about people in MLM, as if no one has ever done anything wrong in this industry – quite the contrary. The goal of this section is to set the guideline for how we might view an ethical business and the ethical activities of ANY business.
A good business makes people’s lives better; a bad business hurts people. That would be the two ends of the spectrum.
As an industry, MLM simply moves a product to a consumer. But in choosing which MLM company you want to join (or company you want to be employed by), I hope you evaluate it based on whether it helps mankind or harms it.
Recommended next page: What is First-Class MLM?
About the Author
Tim’s experience in building his own downline of 56,000 network marketers helped him develop his signature training series. A public relations ambassador for the network marketing industry, Tim has also dedicated his time to debunking the false information spread about the network marketing industry.