Scientific research into multi-level marketing (MLMs) is “remarkably lenient” and shows signs of industry influence similar to tactics used by the cigarette lobby, a new paper warns.
Researchers from Radboud University found a “large majority” of marketing journal publications were positive about the MLM industry, downplaying serious risks. The study, published in the Journal of Marketing Management, also discovered that in 40 of the 68 papers examined, the authors had direct links to MLM lobby organisations.
“Through Instagram, TikTok and other social media, MLMs are increasingly reaching vulnerable young people with expensive courses and trade in dropshipping and cryptocurrencies,” said Claudia Groß, a researcher at Radboud University. “This can cost them thousands or even tens of thousands of euros.”
Pyramid scheme structures
Researchers reviewed 33 legal publications and 68 marketing journal publications on MLMs. They found that legal publications clearly identified negative aspects, such as false income claims, pyramid scheme structures where participants lose money, and illegal claims about products, such as supplements that supposedly cure cancer or COVID-19.
However, the marketing research presented a different picture.
“Of the 68 publications we reviewed, a large majority were positive about the MLM industry,” Groß explained. “They do not mention the problems, but focus mainly on how much consumers could earn from it and the personal growth it brings them. Sometimes, outright misleading statements are even made that downplay the risks of MLMs.”
The authors warn that this creates a false impression that scientific research finds few risks associated with MLMs, similar to how the cigarette lobby used commissioned research to downplay health risks. This allows the industry to cite seemingly independent research to argue that new legislation is not necessary.
