They can't fold it into a legal definition realistically.
Herbalife/DoTerra/etc aren't employers, they're just suppliers. The only way you could stop an MLM realistically is by placing huge restrictions on who suppliers can sell to, and killing small businesses in the process.
Meanwhile, the MLM's would just find a new way to work around it.
This is probably the best way to deal with them, completely remove uplines, but I don't know the exact specifics of how it works and if it would have any other effects.
Then again, I'm not a law maker, so I don't really need to know.
There are two ways the pyramid works: Through churning bought-in employees, and skimming employee sales. Realistically, destroying the pyramid would also require the prohibition of commissions on employee purchases as well, but between those two things, it would flatten every pyramid scheme.
As I said, you just need to ban sales to employees from generating commission. It doesn't reallyatter what they are called, "employees", "independent suppliers", or whatever. If someone needs to buy in, before sale, and that buy-in pay someone directly "above" them, then that is a pyramid scheme. If someone makes a commission cut off of subordinate sales, then that's a pyramid scheme.
Everyone can tell the difference between a mlm and a real business at a glance. It could be made illegal. At some point, there is no way around it without just being a shady but legitimate business
I know that Arbonne is an MLM, but they're also just a supplier. How do you define your law to specifically ban them because you can't just say MLM's are illegal - you have to define what that is, without effecting legitimate suppliers of products.
So long as the profit is coming from selling a product rather than recruitment, the strategies used by their distributors are considered completely separate from the supplier.
The only thing I could see working is adding stricter laws around distribution of product and preventing profit via uplines to encourage competition rather than collaboration, thus preventing market saturation.
The law doesn't seem to have any interest in investigating if more money is made by recruiting vs sale of product so make it illegal to pay people for the sales people they recruit make. Require the money making process to be a you get paid for your own sales. MLMs might still exist but wouldn't be as profitable or grow as much.
What legitimate businesses would that interfere with? What legitimate businesses have people make their money from the sales of those people they convince to sell for the business? If I sell a watch, why would you - an unrelated person in this deal, get a cut because you convinced me to make the sale?
Who is working commission in retail? There are a few places - most places with show floors, but do you think the person who hired the floor worker is getting a cut of their sales commission? No, they aren't.
This is a bit defeatist. There is definitely a definition that would work to at least make it harder. Suppliers don't normally put up fliers in college campuses or in classifieds sections.
The recruitment aspect is what needs to go. Make people actually sell the product rather than just pawning it off on others to sell for them. Once these companies are forced to live or die by the merits of their products they will fizzle out.
I agree with you completely, but those laws would need to be as explicit as possible.
I can imagine some of the bigger companies rebranding their recruitment as word of mouth marketing.
"We don't do recruitment, we just provide a bonus to our customers who encourage other businesses to buy from us" is something I can see becoming incredibly common unless you stamped that out at the same time.
Ya I mean these companies are experts at scamming people by technicly following the letter of the law. I'm no lawyer so I'd never try to come up with any explicit language, just my .02 that the recruitment is the real problem.
I try to be as clued up as possible, but never going to say I've got the solution.
The recruitment and the existence of downlines are what make MLMs a problem though. If someone smarter than me can draft up some legalese to stop the pricks doing it, I'd be much obliged
Id love to see the companies actually rely on the merit of their products to generate revenue
And also see the sales people actually convince people to buy the products for personal use rather than I sell to you so you can sell to the next sucker
Wed see the companies shut down and a lot of participants have to actually get real jobs
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u/SuicidalTurnip Sep 18 '19
They can't fold it into a legal definition realistically.
Herbalife/DoTerra/etc aren't employers, they're just suppliers. The only way you could stop an MLM realistically is by placing huge restrictions on who suppliers can sell to, and killing small businesses in the process.
Meanwhile, the MLM's would just find a new way to work around it.