Wednesday, January 24, 2018

"Multi-level marketing" and "pyramid schemes"

Retired attorney Bruce Craig would welcome hearing from law professors interested in the following issue (you may reach Mr. Craig at brucecrai-at-gmail-dot-com):

As a former assistant attorney general (Wis.) I litigated against a number of pyramid schemes starting in 1968 and ending, for all practical purposes, in 1979 when the FTC ruled in favor of Amway. Now retired,  living in New York, and still involved with this issue to a limited extent.

 

Since 1979, and Reagan, Amway has become a $9 billion/yr world-wide operation, the overall industry's annual revenues about $150 billion. Qualified estimates indicate that the loss ratio of participants in these operations exceeds 95%.

 

Not only has this made the pyramid owners billionaires but, as a direct result, it has also funded a political and governmental machine that has fundamentally suppressed any meaningful enforcement or legislative oversight. This is primarily the result of the victims of these schemes being politically invisible to both sides of the aisle and ignored on the basis they didn't work hard enough. Victims seldom file complaints as they feel they were part of an illegal process and involved family members and friends.

 

The press has primarily focused on disputes between Wall Street titans and not on the ethical and legal underpinnings which have enabled this to happen. Unfortunately, it appears the legal academia has not examined this as well.

 

At present, there is no formal legal distinction between pyramid schemes and "Multi-Level Marketing", with limited enforcement only after the fact. This phenomenon has enabled those not yet sued to claim they are legal MLM and not illegal pyramid schemes. 

 

Given the significant and continuing massive losses, incurred by those mostly in the lower part of the middle class.  This note is to inquire whether legal scholars might be interested in exploring the issue. From a philosophical standpoint I've noticed that the investment and financial communities seem to ignore the underlying damage caused by those listed on the NYSE.

This is far beyond my competence, but I offered to share this with the community of legal scholars and legal theorists, some of whom might be able to help.

http://leiterlawschool.typepad.com/leiter/2018/01/multi-level-marketing-and-pyramid-schemes.html

Jurisprudence, Legal Profession | Permalink