The explosion of risk in MLM

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The following is a guest post from Dave Vaughan, on Ethan Vanderbuilt‘s website: 

Here is my analysis of the predatory practices of Direct Selling companies. We should take much more care in regulating this industry as it functions very different from all other businesses. It turns customers into sellers and commits them to purchasing contracts on a quarterly or monthly basis. This creates the pyramid structure that massively reorganizes wealth.

Business is often characterized most simply as the careful management of risks. Every first year business course introduces students to the principles of SWOT analysis before launching into a series of case studies that examine the odds of success for large and small businesses alike. These cases are applied to nearly every industry. I myself recall being fascinated by the graphical demonstrations Ms. Laura Allan offered us in the 8:30AM lectures at Wilfrid Laurier University.

Never did I think this would be challenged thousands of miles away and more than a decade later when I lost a close personal relationship to someone because of their association with a multi-level marketing company. As with most personal crises I face, I was initially convinced the blame lay entirely with me. After consultation with mutual friends however I realized I was not the only victim of this loss, and I uncovered a deep system of control and manipulation that not only my friend was exposed to, but nearly everyone within the network of these multi-level marketing businesses.


Read the full article over on Ethan’s blog.


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