Pyramid schemes are illegal, but "multi-level marketing" schemes are not; the difference is supposedly that pyramid schemes don't really sell anything — they just sell the right to recruit people who will recruit people who will recruit people, each paying up the pyramid to their "uplines" — while MLMs supposedly actually sell stuff.
Except they don't. MLMs are sales cults that encourage their victims to victimize others, commodifying their friendships and turning every interaction into a "sales opportunity." The primary targets of these cults are moms, Mormons and the military.
MLMs don't get prosecuted despite being massive frauds, thanks to the actions of Amway founder Jay Van Andels, who ran the US Chamber of Commerce, and leaned on Gerry Ford to shut down the DoJ's aggressive prosecution of MLMs. Amway ginned up a meaningless, cosmetic "code of conduct" that supposedly differentiated MLMs from pyramid schemes, and since them, MLMs have used the "code of conduct" as a get out of jail free card. Van Andel's co-founder was Rich DeVos, father-in-law of billionaire religious fanatic Betsy DeVos.
A long, beautifully reported story on MLMs by Casey Bond in the Huffington Post describes the unwinnable nature of MLMs and the pitfalls that exist for people who get sucked into them, who not only lose fortunes and alienate their friends — they also end up owing the IRS vast sums for intangible "benefits" the MLMs toss their way to keep them active.
If this interests you, I strongly recommend The Dream, an amazing podcast series on MLMs, which really leans into the gendered nature of the scam — a group of powerful, charismatic men who convince women to prey on one another.
MLMs fit well into Mormon culture, especially the emphasis on traditional family roles that encourage wives to remain in the home raising children, and maintaining a close-knit community.
There's nothing wrong with observing the Mormon faith or any other religion, but it's evident that MLMs leverage ― maybe even exploit ― their religious customer base and its values to encourage more sales. At a Plexus convention in Las Vegas earlier this month, keynote speaker Bob Heilig told attendees, "So if you are a believer as I know many of you are, here's what you have to realize: You have a responsibility to use the gifts that you've been given for something far bigger than yourself. Because your gifts are much bigger than you and you have a responsibility to share them with the world. And this, Plexus, is the best vehicle you will ever have in your lifetime to do that."
He added: "I believe that your Plexus business is an assignment from God to help you build your faith."
MLMs Are A Nightmare For Women And Everyone They Know [Casey Bond/Huffington Post]