Lewis & Clark Law Review
First Page
355
Abstract
In the United States, the line between financial fraud and legal business opportunity is blurry at best. Multilevel marketing companies have mastered the art of walking in the gray area while avoiding the majority of government regulators. In 2020, the direct sales industry experienced over $40 billion in sales and involved over 7 million Americans as distributors. Countless Americans fall victim to multilevel marketing frauds each year and the U.S. government has done little to protect them from the industry’s inherent manipulation. The recent growth of the industry during the COVID-19 pandemic and the defeat of President Donald Trump has recaptured the attention of the Federal Trade Commission (FTC). In October 2021, the FTC issued over 1,000 warning letters to multilevel marketing companies regarding their deceptive recruitment tactics and unsubstantiated health claims. The multilevel marketing industry has not faced aggressive scrutiny from the FTC since the 1970s. This Comment’s goal is to address the gap in scholarship surrounding the multilevel marketing industry’s history and current legal standards, as well as provide a foundation for others to build upon. This will be accomplished through a thorough review of the relevant history and legal decisions, followed by an application of the relevant standards to a modern-day multilevel marketing company.
Recommended Citation
Hailey Stauffer-Person,
Artful Deception: The Multilevel Marketing Industry's Use of Smoke and Mirrors to Hide Their Pyramid-Shaped Truths,
Lewis & Clark L. Rev.
355
(2023).
Available at:
https://lawcommons.lclark.edu/lclr/vol27/iss1/9