The law and consumer harm in multi-level marketing: a review

Abstract

This paper examines the difference between real-world legal and consumer harm issues caused by multi-level marketing (MLM) and their treatment in marketing literature. The paper contains two literature reviews: first, an in-depth analysis of legal issues discussed in law journals and law reviews; and second, an examination of how MLM is defined and discussed in top marketing journals. This study highlights the legal and consumer harm issues often underrepresented or misrepresented in marketing journals. These include deceptive earning claims, misleading product claims, MLM’s similarities with pyramid schemes, and the financial losses suffered by most participants. The study argues that marketing scholarship contributes a distorted understanding of MLM in an overly positive way, and authors affiliated with the industry have a substantial influence. The study proposes a revised definition of MLM, outlines directions for further research, and invites a critical reflection on the gap between real-world problems and research in marketing.