Lawmakers Want to Blur the Lines Between Legal and Illegal Marketing Schemes
Republican members of Congress want to make life a little easier for multi-level marketing companies. They are pushing legislation to ease restrictions on the pyramid-like companies that have long histories of exploiting their customers and their recruited sales forces.
In mid-July, Rep. Tom Graves (R-Ga.) introduced HR 3280, the Financial Services and General Government Appropriations Act of FY 2018. Around the same time, a Michigan Congressman, John Moolenaar (R), tacked on an amendment to the bill that loosens the definition of the term pyramid promotion scheme and limits funds for enforcement actions outside this new definition. It was adopted on a voice vote by the House Appropriations Committee and will go forward with the bill—never mind that the bill and the amendment aren’t remotely related.
A simple definition of a pyramid scheme would be a scam, right? It’s an enterprise built on a broad base with a narrowing as money rises to the top, but where the base finds its money gone and those at the top get rich.
In reality, there’s no national legal definition defining a pyramid scheme. And there is also no law, or regulation, that clearly distinguishes a scam from a direct selling or multi-level marketing company that looks like and operates like but is not legally defined as, a pyramid scheme.
Direct sales companies, such as the cosmetics marketer Avon, sell their products or services directly to consumers. Business regulators and burned participants say that too often, companies such as Herbalife International of America Inc., ignore the consumer part of the equation and generate most or all of their sales revenue not from customers, but from people recruited to sell the products. Those people have to buy the products as inventory to get started and many have over the years bought a garage full of lipsticks or soaps or diet pills that they could not find buyers for at any price, which looks like a pyramid scheme.
https://www.dcreport.org/2017/08/25/pyramid-scammers-get-a-little-help-from-their-republican-friends/
