This article doesn’t dig into the details, but these companies are really vicious. They aggressively recruit at my college and I’ve seen them to convince students to take what they would have spent on next semesters tuition and use it to buy “inventory” (i.e. more products than they’ll ever be able to resell) instead. These things ruin people’s lives
Absolutely -- it's that promise of financial freedom and products that "basically sell themselves" except you're stuck with the inventory because 10 people are working on the same friends to get them to buy Younique mascara.
My wife did Mary Kay and they had a clause regarding buy back: They would pay 90% of what you paid to buy it and you'd be blacklisted - you could never by a MK consultant again.
So even if an MLM has that type of program they probably make sure people know it'd be bad for them to exercise it.
> they probably make sure people know it'd be bad for them to exercise it.
The example you cite seems to undermine this claim. If you're doing terribly selling Mary Kay products, you get 90% of your money back and... you can't sell Mary Kay products anymore. Which you couldn't do in the first place; why would you care about being blacklisted?
Most have penalties for repurchasing such as restocking and delivery fees that mean they still make good
That is before going into the psychological pressure applied to distributors to not "fail" by asking for a restock, and the incentive schemes that mean many distributors continue stocking up on unsold goods to maintain commission and reward levels
The doc seems specific to Amway. Perhaps this clause:
> 72. Amway, the Direct Distributor or the sponsoring distributor will buy back any unused marketable products from a distributor whose inventory is not moving or who wishes to leave the business. (RX 331, p. 17B to 18B; CX 847; CX 1076) The buyback rule has been in existence since Amway started. (CX 1041 J) Amway enforces the buyback rule. (CX 847; Brown, Tr. 501213; Bortnem, Tr. 686, 690; Soukup, Tr. 913)
In any case I would not be surprised in the least if your upstream told you to pound sand if you tried to return unsold product, regardless of legal precedent. You have to decide if it is worth your time and money to sue them.
Interesting they go the route of selling inventory. It must be required to make the thing legit. From what I could see from one meeting I was tricked into attending (it was supposed to be a BBQ and no mention of any sort of meeting) the real product to sell was the high margin learning materials and seminars. That the effort of course goes into recruiting people to sell this stuff to. The guy who invited me did well to place himself as the "church" and "organizer." The rest were suckers being sold on the "community" component. Do your capitalist prayers and good things will come to you. Have faith!
I’ve absolutely seen that too. Just last week a classmate mentioned that she was going to the Bahamas for the weekend. I asked why and lo-and-behold it’s for a training for her “work.” Undoubtedly this was a huge money maker for someone. I understand the appeal, of course - who doesn’t want to be tricked into believing that taking a weekend in the Caribbean is a good idea financially
wow. I'm sure I'm going to get downvoted but, you think mlm is bad but the VC model is ok. How many people have spent countless unpaid hours and who knows how much money working on a "start up" VCs: Let's out source the high risk part of finding product/market fit instead of paying for R&D and then come in at the last minute and collect most of the profits.
Why shouldn’t the principals of a company that willfully harms so many people’s lives receive a criminal punishment on par with what someone who murders a single person gets?
How do you craft a law to make this illegal though? And then how do you enforce the law? How do you bring these companies to justice?
A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.
A negative attitude toward those who are gullible enough to be sold on a dream, even though a very small % actually succeed. Ironic being this site is geared towards developers at startups.
I don't think that's necessarily true. I know plenty of smart people who just didn't know enough about MLMs and had a bunch of people around them who were doing them, and got sucked in. They're smarter now, but these things are really toxic and cult-like.
If that were the law, then the MLM's simple workaround would be to pay you a recruiting fee based on the success of the people you recruit. If the people you recruit sell a lot, you get a bigger fee because you did a better job at recruiting.
I imagine it'll be tough to craft a law to target MLMs because if it's too broad it'll hit many kinds of legitimate business and if too narrow they'll creatively bypass the rules.
> A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.
Just because you're getting downvoted, doesn't mean you're wrong. Caveat emptor.
That said, the kids who make the options trades probably lose more than the ones who fall for the MLM scams...
At least there is a chance for success with day trading. You might even learn something along the way.
I notice that most people who are deep into MLMs usually don't have any sales experience. If they had invested the same effort generating leads for a business at least they would learn sales skills they could use to create their own businesses. Not to mention that they would be paid a fair rate for their work instead of loosing money.
When I worked retail sales in the 90s there was an Amway cult meeting nearby. Every few weeks, they would drop in after a pep-rally type thing and try to waste your time looking at the most expensive thing and talk about their amazing business. Then they'd drop the pitch (at the time it was about their e-commerce business).
Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business. Really sad.
Cult is the right word for it. I went to a meeting once, met the leader, and it was fascinating. I caught every bit of the psychological warfare in play.
Shortly after, I realized an important fact about MLMs, or at least Amway:
They encourage members to work harder at their real jobs (their plan A) in order to finance what they call the member's plan B (independent business, early retirement, wealth, etc). This results in a siphoning of capital from the legitimate economy to the pyramid organization, producing mind numbing amounts of physical waste in the process.
What's missing from most pyramid scheme diagrams, including the one in this article, are the arrows pointing from the legitimate economy (value adding corporations that the members work for as well) through the member, and then up the pyramid to the top.
Viewed through this lens, it's obvious that MLMs function as parasites, like a tick on a cow.
> producing mind numbing amounts of physical waste in the process.
It's hard not to see bitcoin like this, with the huge energy waste and the newly brought in funds from ad-hoc meme advertising on social media going to early investors.
> Once you ran into them, you could spot them. It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business.
That's really heartbreaking to hear. Usually MLMs sell to types that "really need to make money", when in fact it brings people further away from that.
A friend of mine (almost) fell for a cryptocurrency 'class' that "teaches" people about this "exciting new wealth-building opportunity". But it's instead trying to sell shitcoins.
I remember working retail in 98-99 and an older couple came in. They starting to talk to me about starting an internet business and I was interested as I didn't know any better and the web was all the rage at the time. They came to my parents house and it was basically a version of Amazon Subscribe and Save where they would send you items on a monthly schedule. It sounds like the same e-commerce business idea you encountered.
>It was a mix of desperate mid-life crisis guys looking for cash, clean-cut naive younger people, and diligent moms starting a business.
Something struck me as a bit familiar about those descriptions. And then I remembered, around here, it matches up with the demographics of the gig economy types. Uber, food delivery, etc. Only difference being the gig economy types are drawn more from the poor. I wonder if the desperate who are poor do gig economy jobs, whereas the desperate who are middle or upper middle class, (or those who like to think of themselves as middle class culturally anyway), tend to go for the "start a business" MLM thing?
> the desperate who are middle or upper middle class
I find they tend to do both. The poor won't have the capital nor credit to be an Uber driver. The middle class will engage in both. I've had my share of Uber/Lyft drivers also hawking Herbalife.
Uber is all of the above. Some people are middle class folks selling car depreciation at a loss. As rates drop there are fewer of these folks.
A lot of these guys now are subcontractors in my area. Drivers frequently don’t match the picture and the standards for the cars drop. My final Uber ride was a male driver (expecting a female) in a 2006/7 Odyessy that was beat to shit.
I used to do work in systems for motor carrier regulation and its likely that the car and driver were unsuitable for passenger service. I had to get to the airport, but I deleted the app immediately afterwards.
I used to gets people of the same ethnicity as me befriend me at the mall and elsewhere. Usually they would call me a week later and chitchat before dropping their pitch about whatever MLM business they running. I got used to it and started string them along and waste their time.
I wrote and deleted a long response. The short version is that they can be broken into two groups:
1. Distributors are paying well over wholesale and their margins are much closer to referral fees that really don't support the full retail effort.
2. Distributors are paying closer to wholesale but are buying junk that nobody actually wants. This is more like a ponzi scheme with items that theoretically hold value.
I wonder why MLM's are so rampant in the mountain west. I know "mormons" and "sales experience from missionary work" but the analysis can go deeper. From personal, anecdotal experience, a lot of these MLM people I've seen are moms. Could it be that that area is so sales heavy that stay-at-home moms want to run their own thing so they get into MLM on the side?
Mormons tend run the companies and seed the initial demand.
Moms with built in communities are big markets. Wherever you have a big military, police/fire/prison presence you'll see these all over. Also certain church communities, certain freelancer type industries, (yoga contractors, photographers) etc.
I was raised Mormon since birth. I recently recovered from it a few years ago. But I can tell you that MLMs are INSANELY POPULAR among Mormons (especially the female crowd). I could go into detail about why, but it basically boils down to a few key factors:
- Mormons have huge community networks.
- Mormons are gullible (this will feel offensive to current Mormons, but unfortunately it is true, the entire relgion basically requires you to believe in very crazy stories that are easily proven false if you question them even a tiny bit). And once a leader has been built up to be a "trusted leader" they are taught to follow them without question.
- Mormon women are mostly homemakers (the church largely enforces or "encourages" this), who are looking for ways to support their family or themselves. Work from home schemes that require little work are very attractive to them.
- Mormons have huge families with generally only 1 primary earner. So they often need the extra money. Get rich quick schemes tend to do well within Mormon communities for this reason.
- The Mormon religion is organized nearly identical to an MLM, with layers of free labor. The big worldwide Mormon "rallys" (called "General Conference") is almost identical to a rally for an MLM. If you have been to both, it is hard to tell them apart.
I have been involved in MLMs (through other Mormons in my area) before and the line between MLM and Mormonism is pretty blurry. Mormonism is basically an MLM selling you eternal life (just requires 100% obedience to their laws, and 10% of all pre-tax income you make during your lifetime). So for Mormons who have grown up that way, the MLM atmosphere is very comfortable and familiar. They trust it more than the standard corporate structure. MLMs roll through Mormon communities like wildfire for those reasons.
I have been personally invited to more MLMs as a Mormon than most people reading this even know existed. It is a pillar of Mormon culture.
I've noticed that "military, police/fire/prison" families and some church communities like to "support our own" and buy from "locally owned businesses". I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community.
Sadly the dividends that MLMs return are mostly negative (debt, friction of social bonds, etc).
> I think MLMs allow people to buy what they think is a locally owned business that they believe will return dividends to their own community.
This would be the sane selling point for people who aren't susceptible to cult following. I was tricked into going to one of these meetings and at first I thought this is what it was. I was envisioning a sort of Amazon meets Costco scheme where you can get greater discounts with the more bulk that you buy. That's not keeping money in the community, but at least it's saving money in a community buying pool.
The first speaker at the meeting even got into a small business presentation which had nothing to do with MLM. I thought he did great. Then came the preacher, and everything fell into place. This is some sort of scam.
I would have been fine with the thing if it would have been a group buying thing where you save money AND stuff gets delivered to your door. I never did get far enough to see if there would have been any savings though.
They also have shift work husbands and are more likely to have a female spouse at home when kids are young. Pension systems make it very difficult to get out of the job after a few years.
If you go to a police or fire station and ask, easily 30% of the wives are nurses, as it’s a job with super flexible schedules. MLM gets pitched as a way to make some extra dollars.
It might also be a side effect of how maps in the mountain west and mid west tend to visually overemphasize the impact of those regions. They have low population density and large area, so they can be more sensitive to smaller target populations while also "popping" visually.
Having been raised Mormon, it ain't surprising in the slightest that so many of these are concentrated in and around Utah/Idaho.
There are a multitude of factors at play here:
- Like you mentioned, door-to-door proselytism translates well to door-to-door sales.
- Mormon communities tend to be very tight-knit and immediately trusting of fellow Mormons, so once you have a critical mass of LDS followers selling your "inverted funnel", it's gonna spread like wildfire.
- The Church of Jesus Christ of Latter-Day Saints actively discourages any sort of rational individual thought, instead encouraging its members to "doubt your doubts" and follow the Church without question. This ends up serving MLM marketers well. The Church is America's longest-running and most-successful MLM scheme; to your average Mormon, this is all very "normal".
- The Church does its best to railroad women into being faithful wives to their husbands and mothers to their children, which (as you touched on) translates to emphasizing stay-at-home parenting over holding a full-time job. This keeps Mormon women busy for a few years, but once those kids are in school (and even moreso when those kids grow up and move out), there ain't a whole lot to do at home. Mormon women - being human beings with free wills, contrary to what the Church would want us to believe - are thus inclined to take up part-time jobs, especially ones that they can do without compromising the Mormon ideal of women-as-domestic-servants-to-their-husbands. MLM schemes tick all the boxes, or at least so their marketing claims.
- Middle America already has a strong predisposition toward distrusting modern medicine/science, so appeals to "traditional" medicine tend to be somewhat more effective.
> The Church of Jesus Christ of Latter-Day Saints actively discourages any sort of rational individual thought
As an active member, I can say that this comment is untrue. The Church actively encourages education. A simple example is the amount of money it pours into the BYU education system. There is a big emphasis on acquiring knowledge and wisdom.
I actually think that the first two factors are more important and more relate to the culture of the state of Utah than of the Church as a whole.
There is a big emphasis on acquiring the "right" knowledge and wisdom. Anything thing factually based that runs afoul of the teachings of the Church are immediately smeared as being "anti-church literature peddled by the Adversary."
For numerous examples, see pretty much everything cited in Letter to a CES Director, despite all of this being sourced first-hand from Church documents.
> A simple example is the amount of money it pours into the BYU education system.
You mean the university system named after the guy who led the Mormons to Utah after Joseph Smith died? The one that's owned and operated by the CoJCoLDS? Gee, no connection or bias there, no siree.
There's an emphasis on acquiring "knowledge" and "wisdom" if and only if it happens to agree with Church doctrine and avoids being critical of the Church in any way. "Brigham Young University exists to provide education in an atmosphere consistent with Church ideals and principles."; BYU's words¹, not mine. Those principles would obviously include those outlined in scripture, which consequently includes enforcing Mormon doctrine as "the truth" with little to no room for compromise; this is consistent with BYU's Statement on Academic Freedom², where said "freedom" is implicitly (if not explicitly) stated to be only for those who believe in and obey the Church and its teachings to the letter. The AAUP has described at length³ BYU's frequent infringements on academic freedom for its faculty (typically by punishing those who teach things that might make the Church look bad, even if those things are factually correct).
My comment was somewhat hyperbolic, but it is indeed the truth. I know it's an unpleasant truth, and I know it conflicts with what the Church has taught us both, but it's a truth that unfortunately we can't afford to ignore.
The church does emphasize (careful) secular education. But I think the original comment was referring more to doctrinal education, which the church actively discourages. Also, if doctrinal education ever conflicts with secular education, then doctrine trumps everything.
The example of the money the church pumps into BYU does more to hurt your counter-argument than to help it. The church pumps so much money into BYU so that it can provide formal education to its members, while controlling the education experience. The purpose of BYU is exactly to further the controlled church experience and controlled education of the world.
In fact, the Church is incredibly smart in how they operate. The most personal interaction you have with the church is between the ages of 18 - 25. These are the most malleable ages for a young adult, since this is the time that they naturally seek direction and purpose in their life. The church is top of mind for members during this time, and so the church has created a system where they can control these important years to mold future faithful followers and spread the religion.
The day you turn 18 they start "preparing you for a mission". Then they send you to the temple where you are told that you have now entered into covenants that, if broken, will now fuck you up for eternity. With the fear of your eternal salvation in the balance, they then send you off for 2 years to a church obedience boot camp (usually referred to by the euphemism of "a mission") where they literally control everything you say, think, or do for 2 full years. They pull you away from the environment you once knew, even frequently to another country. They control who you associate during these years, and try to build habits towards being a good future member. As soon as you graduate from the 2 year boot camp, they promise a sex-deprived 21 year old that they can now get laid by going to BYU and finding a beautiful mormon virgin who has been waiting for them their entire life. Then at BYU they can again control the narrative of your life. Curriculums meet national standards for accreditation here, but are also taught by other members who are committed to controlling the narrative of the Church. Now that you are married, you are encouraged to start having kids. Most BYU grads will already have kids by the time of their graduation. Once you have kids, now the emphasis is to raise them within the church. They will now begin primary school (as you once did) and continue the cycle that you just completed. By the time the church "lets go" of you during this important part of your life, you are 25 or 26 years old, already have several kids, and you don't want to ruin their lives by questioning church teachings. You final job as a 26 year old member is to "endure to the end". Quite possibly the saddest, most depressing stage of Mormonism. I hate when my Grandma tells me she is "enduring to the end". During this stage (between ~30 -> death) your goal is to "endure". Not enjoy, but endure.
During the endurance stage you are told to: go get a job so you can pay for your kids and pay your 10% of your pre-tax income as "tithing". Go to church every sunday. Take your kids to church every wednesday. Go to the temple for further doctrine reinforcement on Saturday. Don't drink coffee, tea, alcohol. Don't think impure thoughts. Just rinse and repeat. Just "endure", until you have the pleasure of dying.
BYU is very important to the Church's membership and tithing dollars. They aren't running that church from the bottom of their hearts. It all controls their members. If you remove BYU from the church's plan (as outlined above), they would lose MANY MANY members during those important ages of 18-25. They have created an effective algorithm/strategy that creates a cycle of promises and control mechanisms to keep you in the hamster wheel. BYU is critical to that strategy. That is also why BYU Idaho exists. It allowed them to broaden their net to even more young adults.
This is mostly the controlled experience that a man would experience within Mormonism. Unfortunately a woman's experience is even more depressing and controlled. But follows a similar outline.
So back to the original point. Yes, I would argue that in fact, "The Church of Jesus Christ of Latter-Day Saints actively discourages any sort of rational individual thought".
I worked at a small company in Utah, and we shared a building with a MLM company. I have 2 fun stories.
One day, when I was arriving at work there was a red carpet laid out and people opened the doors for me. I felt pretty good for a few seconds. Turns out I had arrived just before a "high level member" of their MLM, and so they were really putting on a show, but not for me.
The company eventually went about of business and was just giving away a lot of the fancy pins and badges that "high level members" of their MLM had worked so hard to earn, I took a pin just for the fun of it. I instantly became a "Black Diamond" level member (or something like that), whatever it was it must have been pretty good because the pin had fake diamonds on it. Kind of shows how silly the whole thing is.
Your first and second points are strong hypotheses. In my opinion the third in particular needs substantiation. It's quite common for external religiosity to be negatively correlated with higher education (a reasonable proxy for "rational individual thought," which is otherwise difficult to measure). Neutral evidence points towards the opposite for members of the Church of Jesus Christ of Latter-day Saints - unique in having a strong positive correlation wherein the more highly educated, the more religiously active a member is, at least in the United States [1]. Members are also more likely to have a college education than non-members (61% vs. 50%) in the U.S. as a whole, again not supporting an aversion to rational thought [2]. Neither of those disproves your assertion, but they do provide evidence to the contrary.
> In my opinion the third in particular needs substantiation.
Fair enough. Exhibit A would be the AAUP's report on BYU's academic freedom¹ (BYU - Brigham Young University - being the LDS-owned-and-financed university system, aimed specifically at Mormon students and faculty). Money quote:
Many faculty members shared in some detail the narratives of
their problems with academic freedom, reappointment, promo-
tion, and tenure, frequently producing documents but asking
that their names and identifying circumstances not be included
in this report. At least two cases are in litigation against the uni-
versity. Some cases involve issues of personal conduct that are
under investigation and others focus on academic research that
raises concern with the administration. Several creative artists in
different fields told of pressures to alter works to meet unclear
administrative agendas. The ability of faculty members to leave
BYU after many years of service is impeded by a non-portable re-
tirement plan. Numerous women, some in groups and some
alone, spoke to the investigating committee about the hostile cli-
mate for women on campus. Many expressed the view that single
women and women who want professional careers are under sus-
picion by the administration and the LDS Church because the
Mormon Church considers marriage and family the first duty of
a woman.5 Overall, faculty members described an intensified
pressure in recent years for a rigid orthodoxy and active interfer-
ence by Church officials in university business to the detriment
of faculty morale.
And bear in mind this is a university (or more accurately three universities, though the report predates BYU Idaho transitioning from a junior college to a 4-year university, which is likely why only BYU and BYU Hawaii are mentioned). If even the Church's own university prioritizes Church doctrine over free thought and academic integrity, then the Church itself - and the various stakes and wards thereof - is unlikely to be much better.
On another note, per your second source, the "61% vs 50%" only pertains to individuals with "at least some college education"; the percentages drop to national averages when you look at actual graduates (18% of Mormons, v. 16% nationally) or those with post-graduate education (10% of Mormons, v. 11% nationally). Not that college education is really a reliable proxy for rational individual thought anyway (lots of smart and rational people didn't go to college; lots of less-smart and/or less-rational people did).
I've wondered that too. One would think that religious people would have some aversion to harming others. Harm to the people you recruit is basically what direct sales amounts to.
Another question is, are religious people more likely to fall for this scheme? It seems Western religion almost requires habitual suspension of critical thought of all claims.
> Harm to the people you recruit is basically what direct sales amounts to.
The trick is to make the seller believe one is helping the customer instead of hurting. dōTerra is an excellent example of this, encouraging its marks - sorry, "representatives" - to "spread awareness" of the "benefits" of its overpriced snake oils - sorry, "essential oils".
Like, don't get me wrong, I buy essential oils. I even work for a company that sells them. The difference is that I buy them because I spritz my wool dryer balls with them and they make my clothes smell good, not because I think it'll cure my migraines or fix the bald spot on my head. I also don't try to run a pyramid scheme with them.
Atlanta is a big dot though. With the growth of the Atlanta metro it may eventually make Georgia a blue state in national elections, similar to how the Twin Cities with ~60% of Minnesota population make it vote democratic.
It occasionally happens that Atlanta carries Georgia, but if you look at the composition of our state-wide representation (major office holders), it doesn't historically trend blue.
The article lists a lot of MLM companies that started on the coasts and worked inward, including pretty much every snake-oil "wellness" product supplier.
ASEA, ATOMY, Jeunesse, Kannaway, LulaRoe, World Global Network
If you count Texas's Gulf Coast the figure would be higher. For many of the rest it's the Mormon effect. Neighbors want to help neighbors and that ends up involving them buying into MLM snake-oil pyramids.
I think it depends on the products, like Rodan & Fields seems to be popular specifically in higher income / educated demographics compared to other MLMs, like I've seen people who seem like they should know better get roped in to RF but they'd turn their noses up to Herbalife.
This is a guess, but a pyramid scheme is illegal, and so calling 'legal' companies by the term might be considered slander.
Since some of these companies live to bully through the court system, it's probably a conscious decision to avoid the term.
Just a guess though.
I'm not sure what the purpose of the article is. It mentions a bunch of companies I've never heard of and has maps apparently of which states people search for their company name on Google, each year from 2008 to 2018. I suppose they are showing growth of interest in each company name. But there's not much commentary in the article. Just maps and a paragraph description of what the company is selling and a brief history.
The first on the list claims is an oil and gas company popular in Texas that somehow sells oil and gas using a multi-level marketing scheme?!? Whaaaat? The article doesn't even explain how that works or what they are really selling. Do random independent distributors buy gas tanker trucks and make deliveries to farm houses then try to recruit the farmer to sell to his neighbors? They could have tried to explain what this company is about. But instead it's just these maps and cryptic descriptions.
Another one says a MLM company sold leggings that became popular, then lowered in quality, which resulted in lawsuits. But no mention of lawsuits about what.
Not sure the article is useful or the title "epidemic" is justified. There probably is a MLM epidemic, but the article doesn't really support that. Just lists some random companies with spartan facts and some maps derived from Google search data.
These MLM "companies" are a scourge on many desperate and under-educated people. They prey on the desperate and it's unbelievably unfortunate that it's still actually legal.
I'm always amazed by how well MLMs inoculate their sellers to criticism. Questioning the merits of the product or the distribution system usually results in conflict. A lot of people selling these things think they've discovered something special and that they're clever to have picked it up and run with it. Once they're at that point there is no stopping ego.
I mean what if there were no centralized retailers, everybody would be encouraged to re-sell, everybody would be rewarded for distributing to other active re-sellers, people receiving abnormally high passive income from their networks because of their high position in the distribution hierarchy would be taxed to reward active minors.
At the same time businesses producing goods (rather than distributing tem) and services (incl. storage, logistics and quality control) would remain the classic way, MLM is just about the sales.
Just imagine buying all your groceries and gadgets from neighbors and friends rather than from Walmart/etc. Wouldn't that be nice?
Oh, I see what you mean. Then my answer (not facetious) would be "because that would suck". I don't want to be a micro-distributor, I don't know a lot of people outside of sale that would think that's awesome, and if there's anything MLM has proven is that buying exclusively from your friends/acquaintances/neighbors is a good way to ruin relationships.
Sure...there's a more equitable scheme to equalize distribution of wealth, but please don't let this be it.
Over the past 15 years, I've had the opportunity to work with more than a dozen MLM companies in the UK. This won't be a popular opinion, however I believe great quality products and a self-regulating industry can create businesses that are far from being a Ponzi scheme but are legitimate companies with ethics, great support and opportunity to earn decent money.
At the core of it, MLM is a legitimate business strategy to get a relatively unknown product distributed through a network effect.
I create a meal replacement smoothie. Some friends want to try it, so I hook them up. Then friends-of-friends ask about this smoothie that isn't available, so I let them sell the product to other people in exchange for a cut. I quickly realize that I don't have the capital for to materials. Product is moving too fast, so I ask them to pay up front for some of the materials.
The problem is that this benign relationship that helps both of us can be easily made predatory.
What "great products" need to go through MLM? Arguably, it's easier than ever to launch a product direct to buyers. And it's neither easy nor cheap to build a multi-level network of distributors.
None of the UK-active MLM schemes I've seen has an ethical reason for using MLM rather than legitimate sales channels.
Let's look at some. Cleaning products that are vastly more expensive (in part to fund the MLM commissions) than High Street equivalents. Questionable dietary supplements that rely on woo-woo rather than scientific backing. And of course, electricity, gas, and phone service with the added margin to pay for all those ad-emblazoned Minis and, again, MLM commissions.
Maybe it's like communism. People like to say that, on paper, it's a great idea (I disagree but that's not the point). Those same people also say that it has never been implemented properly, and so it's not the fault of the idea that it has always led to national scale human misery.
In your view, MLM could lead to ethical companies with great products etc. But the past few decades show that every time it's tried, MLM actually preys on the dreams/needs of the vulnerable, adds huge margins to mostly crap products, and the people who get suckered end up mostly losing money.
MLM is a horrible idea that leads to horrible outcomes.
