The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

Abstract

Multi-level marketing companies (MLMs) such as Amway, Herbalife, or Tupperware differ from most other companies. They market their products and services by means of self-employed distributors who typically work from home, sell products to end consumers, and recruit, motivate, and educate new distributors to do the same. Although the industry's growth seems to illustrate the attractiveness of MLMs, the industry has been facing several legal and ethical problems. In this paper, we focus on these problems and argue that an extended MLM model may help us to understand why such problems continue to occur, despite the countermeasures that have been implemented. By explicating how problems relate to a specific but often overlooked characteristic of MLMs, i.e., the socalled distributor network, we provide an extended understanding of (a) MLMs' mode of operation, (b) the sources of their legal and ethical problems, and (c) the reason that currently implemented and suggested countermeasures may not suffice. Moreover, based on our extended understanding of MLMs and their problems, we propose additional countermeasures.

Mechanisms of biopower and neoliberal governmentality in precarious work: Mobilizing the dependent self-employed as independent business owners

“…In sum, the network-based business model functions as a mechanism of biopower and managerial control by embedding the distributors into a productive network of socially and economically interdependent enterprises—which may be viewed as a centrifugal force (Foucault, 2007: 44)—and then cushioning the IBOs from the harshness of the competitive logic of this network by invoking the community. While CloudNine does not try to control its IBOs by prohibiting and preventing certain actions, the network-based business model that it deploys generates a strong corporate culture and community that exerts social control over its members (see also Groß and Vriens, forthcoming). As CloudNine put it in its promotional material: ‘You are never alone in the CloudNine business.’…”

Innovación Tecno-Educativa “Google”. Plataformas Digitales, Datos y Formación Docente

“…Todo ese esquema de ascensión en la formación docente certifi cada, denominado desarrollo profesional Google, opera con un mecanismo similar a los esquemas de mercado multinivel o piramidal, donde se recluta, educa y motiva a los nuevos consumidores (Groß y Vriens, 2019). En el esquema piramidal de la formación de Google, los participantes certifi cados tienen que recomendar y captar a más docentes con el objetivo de que los nuevos participantes produzcan benefi cios a los participantes originales.…”

Mechanisms of Identity Construction among Members of Pyramid Schemes in Iran: A Critical Ethnography

“…Other studies pointed up the psychological consequences of network marketing, as Krige (2012) showed that participation in such firms is a sign of soullessness, lack of education, and greed. Regarding ethical issues, some believe that MLM is intrinsically inappropriate (Albaum and Peterson 2011), particularly with abusing personal connections for commercial activities (Grayson 2007;Groß and Vriens 2019), as well as causing family disputes (Pratt and Rosa 2003). Groß and Vriens (2019) PS, similar to the other social organizations, can lead to building an identity among their members (Alvesson, Ashcraft, and Thomas 2008;Gioia et al 2013).…”