"Be Your Own Boss" in COVID-19? The Dark Side of MLMs
Psych 🧠 - 410/500
Hello Reader,
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What is it?
The paper analyzes the increase in MLM activity during the COVID-19 pandemic.
It explores how MLMs work, focusing on the contrast between legitimate direct sales and pyramid schemes, highlighting how the pandemic provided a fertile ground for MLMs due to unemployment, the need for flexible work, and increased social media use.
Key Findings:
The pandemic created an environment ripe for MLM growth, but MLMs often exploit vulnerable individuals (especially women).
Most MLM participants lose money, while a few at the top make substantial profits.
Distinguishing between legitimate MLMs and pyramid schemes is difficult, even for regulators.
Current laws and regulations are limited in their ability to effectively curb MLM abuses.
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What do I need to know:
Be very wary of MLM opportunities, especially those promising quick riches or health miracles.
Do your research! Understand how the MLM is structured and how participants earn money. If recruitment is the primary focus, it’s a red flag.
Be aware that social media is a prime tool for MLM recruitment, and avoid pressure from friends or family to join.
Know that legal and regulatory actions against MLMs are limited, but increased awareness and scrutiny can help protect consumers.
Source:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3898823