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Just imagine, mlm companies operating with little to no retail sales activity with full impunity from the law. Thats a disgraceful enough proposal on its own. Direct Selling Association is advocating it? How about the dsa stop representing the interests of dodgy company owners paying their bills and try representing the best interests of the industry for a change? And if thats not sustainable, maybe its time to do away with the dsa altogether. Ive been writing about the mlm industry for over seven years.
Here we go, while the bulk of Marianos justification wastes your time with a general defense of the mlm industry nobody asked for, the real problem for the dsa is theyre aware most of their member companies dont generate significant retail sales activity. I cant support this claim with evidence, as no jurken mlm company Im aware of publishes retail sales volume data (funny that). But Vemma and Herbalife were not small companies, and if they permitted to retain dsa membership and operate as pyramid schemes it follows that regulatory investigation into other dsa member companies would lead to enforcement actions. And so, instead of acknowledging some of their members are running pyramid schemes, the dsa, company membership fees in hand and politicians by their side, are now lobbying to legalize the pyramid scheme business model. Make no mistake, having to ignore a lack of retail sales would have thwarted regulation. Zeek rewards (850 million dollar Ponzi scheme telexFree (3 billion dollar Ponzi scheme vemma (200 million dollar pyramid scheme) and Herbalife (billion dollar company fined 200 million for being a pyramid scheme). With potentially billions of dollars in losses by the general public at stake, the moolenaar Amendment cannot stand. As someone who covers the mlm industry day in and day out, without doubt the biggest threat the industry faces is the emergence of cryptocurrency scams utilizing mlm business models. Probably 70 of new mlm companies I review these days are in the cryptocurrency niche or utilize cryptocurrency as a method of payment. Yet you wont find anything about cold cryptocurrency scams on the dsas website or in their lobbying efforts. Theyre far too busy trying to legalize pyramid schemes through sneaky dead of the night amendments.
a defense of the mlm industry as a whole. Direct selling is no pyramid scheme writes Mariano, who then proceeds to sell you on why the us needs to legalize pyramid schemes. Everyone who engages in or is considering engaging in direct selling, be they consumer or business builder, needs better protection from the reputational and financial harm caused by pyramid schemes that masquerade as legitimate businesses. An amendment proposed by Rep. John moolenaar (r-mi) to the fy 2018 Financial Services and General government Appropriations bill, july 13, would define a pyramid scheme under federal statute for the first time and make clear that direct sellers buying products for their own personal use is a legitimate business practice. Everyone wants pyramid schemes prosecuted to the fullest extent of the law, but nowhere in federal statute is it clear to consumers or anyone else what constitutes a scheme. I dont know where mariano has been, but the ftcs busts. Vemma and, herbalife defined what a pyramid scheme is just fine. Youre running a pyramid scheme. Perhaps not so coincidentally, both Herbalife and Vemma are dsa members.
The moolenaar Amendment: Why is the dsa pushing pro-pyramid law?
As I mentioned earlier, the dsas current agenda is to put into law that mlm companies dont have to generate retail sales. And so we have the moolenaar Amendement, quietly tacked onto the house financial Services and General government Appropriations bill. What does fahrenheit the mlm industry have to do with financial services and government appropriations? That legislation has to be passed though, and the idea is that by attaching the moolenaar amendment to it, a pro-pyramid scheme law might fly under the radar. Moolenaars amendment proposes that direct selling does not require selling products primarily to people who are not distributors. That is to say an mlm company could generate 100 of sales revenue from recruited affiliates and ignore retail sales altogether. This is problematic for what should be obvious reasons. Pyramid punta schemes and Ponzi schemes that utilize pyramid recruitment, by design have little to no retail activity taking place.
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Personally i think mlm regulation vitale in the us is in a pretty good place. Other than the host of affiliate autoship recruitment scams that still need to be cleaned up (nutrition niche, im looking at you there hasnt been any major Ponzi or pyramid scheme launches in the us since the vemma and Herbalife busts. With 50 or more retail sales volume the cornerstone of current regulatory enforcement (other than outright securities fraud on the ponzi side of things all the ftc and sec need to do is enforce the law. Not so according to the dsa, who for some reason believe the industry desperately needs to kill off any retail sales volume requirements. While i dont personally take the dsa very seriously (far too many nutrition niche autoship recruitment schemes in their member-base its undeniable they have political clout. Among others, the dsa website lists Repulican Congressman John moolenaar as a direct Selling caucus Member. That means he can be counted on to push the dsas agenda as required.