Skip to main content

Ethical Issues Connected with Multi-Level Marketing Schemes

Abstract

Multi-level marketing (MLM) schemes are one of the fastest growing types of business. However, little has been written about the ethics of MLMs. This oversight is somewhat surprising, especially because some prominent MLMs have been accused of being pyramid schemes. Pyramid schemes were the number one type of internet fraud in 1996, and the fourth most common form of internet fraud in 1997 (National Consumers League, 1997). This paper examines the nature of MLMs and their similarities with and differences from pyramid and endless chain schemes. The paper argues that MLMs pose some unique ethical issues, issues that are not easy to address or resolve.

This is a preview of subscription content, access via your institution.

References

  • Barrett, S.: n.d., 'The Rise and Fall of United Sciences of America', MLM Watch at http://www. mlmwatch.org?04C/USA/usa.html.

  • Cornell, T.: 1996, 'Firm with Mass. Network Faces Fraud Complaints', Boston Herald (February 22).

  • Federal Trade Commission: 1999, 'FTC, Six States Sue Equinox International: Law Enforcers Ask Court to Halt Illegal Pyramid Operation', FTC News Release (August 9).

  • Fitzpatrick, R. and J. Reynolds: 1997. False Prophets (Herald Press, Charlotte, NC).

    Google Scholar 

  • Gianelli, D.: 1999, 'Ethics Council Revisits Office-Based Product Sales', American Medical News (June 7).

  • Gilje, S.: 1996, 'If It Sounds Too Good to Be True... Well, Just Ask Them', Seattle Times (August 25).

  • Koehn, D.: 1994, The Ground of Professional Ethics (Routledge, London).

    Google Scholar 

  • Mills, A.: 1996, 'Equinox Hits the Fan', MetroActive (November 14).

  • National Consumers League: 1997, 'Keeping an Eye on Internet Fraud', Internet Fraud Watch at http://www.fraud.org/internet/97stat.htm.

  • Reese, S.: 1998, 'Get Your Hands Off My Downline!!!’ MLM Law Library at http://www. mlmlaw.com.

  • Reese, S.: 1999, 'Securities Law and MLM-What's the Deal?’ MLM Law Library at http://www. mlmlaw.com.

  • Revised Statutes of British Columbia: 1996, Multilevel Marketing Regulation Act (Crown Publications, Inc., Victoria, BC).

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Koehn, D. Ethical Issues Connected with Multi-Level Marketing Schemes. Journal of Business Ethics 29, 153–160 (2001). https://doi.org/10.1023/A:1006463430130

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1006463430130

Keywords

  • Economic Growth
  • Marketing
  • Pyramid
  • Ethical Issue
  • Market Scheme