Ethical Issues in Multilevel Marketing: Is It a Legitimate Business or Just Another Pyramid Scheme?

Muncy, James A.

doi:10.1080/10528008.2004.11488877

Cited by 27 publications

(24 citation statements)

References 12 publications

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“…While misrepresenting the true nature of a business opportunity is related to pyramid schemes (see above), it also seems to be a common practice in 'legal' MLMs in the sense that relevant information about the business opportunity is not presented truthfully or withheld (see accounts by former distributors, such as Andrews 2001;Smith 2013;Sonnabend 1998; for research see Groß 2008;Koehn 2001;Muncy 2004; for consumer advocates, see ''Appendix '' 11,12,13 ; for FTC see Ramirez 2016). Whereas overstating the quality of products and services might be a common and also ethically neutral business practice, in the MLM context overstatements seem to be so widespread, that they have been discussed as ethically problematic (Koehn 2001).…”

Section: Misrepresenting the Business Opportunitymentioning

confidence: 99%

The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

Groß

Vriens

2017

J Bus Ethics

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Multi-level marketing companies (MLMs) such as Amway, Herbalife, or Tupperware differ from most other companies. They market their products and services by means of self-employed distributors who typically work from home, sell products to end consumers, and recruit, motivate, and educate new distributors to do the same. Although the industry's growth seems to illustrate the attractiveness of MLMs, the industry has been facing several legal and ethical problems. In this paper, we focus on these problems and argue that an extended MLM model may help us to understand why such problems continue to occur, despite the countermeasures that have been implemented. By explicating how problems relate to a specific but often overlooked characteristic of MLMs, i.e., the socalled distributor network, we provide an extended understanding of (a) MLMs' mode of operation, (b) the sources of their legal and ethical problems, and (c) the reason that currently implemented and suggested countermeasures may not suffice. Moreover, based on our extended understanding of MLMs and their problems, we propose additional countermeasures.

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Section: Misrepresenting the Business Opportunitymentioning

confidence: 99%

The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

Groß

Vriens

2017

J Bus Ethics

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“…Umumnya melihat bagaimana keterkaitan antara budaya organisasi dan kinerja karyawan (Munsi 2012;Sinaga 2009) dan strategi bisnis Oriflame dalam membangun jaringan (Matuh 2010). Muncy (2004) berfokus pada issu-issu etik dalam multilevel marketing dengan mengeksaminasi lima pertanyaan dosen pemasaran untuk diujikan jika mahasiswa mendapatkan kesempatan untuk terlibat dalam MLM, yakni: bagaimana menghasilkan uang? Apakah produknya sah?…”

Section: Pendahuluanunclassified

‘Bisnis Oriflame, Bisnis Konsultan Itu Sendiri’: Budaya Organisasi Multilevel Marketing untuk Mewujudkan Mimpi

Kamawo¹

2017

ETNOSIA Jurnal Etnografi Indonesia

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Multilevel marketing (MLM) is one of the marketing strategy which combines between distribution channel and direct selling to the consumers. One of the most popular MLM companies in Indonesia registered in the Indonesian Direct Sale Association (Assosiasi Penjualaan Langsung Indonesia, APLI) is PT. Orindo Alam Ayu, known as Oriflame, and is focused on beauty products. This article deals with Oriflame’s organisational culture by examining the organisational values and norms to achieve the company’s vision and mission, and how the norms are practiced. The study indicates that in internalizing the values (togetherness, spirit, and passion) and norms of Oriflame (operational principles, conducting a four-in-one events—Welcome Party, Step-One, Step-Two and Meet-Up Team, and success plan through TRB), from which Oriflame consultants learn how ‘to achieve their dream’ (mewujudkan mimpi). In such business, every consultant (upline as well as downline) is a working partner and they workin a complementary system, so that a consultant’s success is the success of others in the network. It is argued in this article that Oriflame is ‘an achievement dream business’ that is developed on the basis of its values and norms. How much income and in what level of success plan are intended to achieve depend on the consultant itself because Oriflame business is ‘the business of the consultant herself/himself’.

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“…Given there are 13.6 million direct sellers in the United States, the majority of which are independent contractors not under the legal control of an MLM firm, isolated instances of unethical behavior are bound to occur. However, as Muncy (2004) pointed out, unethical behavior occurs in numerous industries; it is not restricted to MLM. Clearly, the public image of MLM could be improved, but perhaps its image is analogous to that of Wal-Mart, the retailer that everyone but consumers loves to hate.…”

Section: Discussionmentioning

confidence: 99%

On the Ethicality of Internal Consumption in Multilevel Marketing

Peterson

Albaum²

2007

Journal of Personal Selling & Sales Management

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This paper examines the ethicality of internal consumption in multilevel marketing. Internal consumption occurs when distributors in a multilevel marketing organization purchase and personally consume the products and services of their multilevel marketing firm. The paper documents that internal consumption is a common, widespread phenomenon found in all types of firms and that criticism of this aspect of multilevel marketing as being unethical and fraudulent is misplaced.

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Ethical Issues in Multilevel Marketing: Is It a Legitimate Business or Just Another Pyramid Scheme?

Cited by 27 publications

References 12 publications

The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies

‘Bisnis Oriflame, Bisnis Konsultan Itu Sendiri’: Budaya Organisasi Multilevel Marketing untuk Mewujudkan Mimpi

On the Ethicality of Internal Consumption in Multilevel Marketing

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