Aren’t no-product pyramid schemes more harmful than MLMs, or product based pyramid schemes?
A. Many assume that since MLM chain sellers offer legitimate products they cause less losses than naked, no-product pyramid schemes. The facts show otherwise. Extensive research correlating the compensation plans with financial reports of leading MLMs and analyses of other classes of chain selling schemes leads to the conclusion that of all classes of pyramid/chain selling schemes, those that do the most harm are MLMs (product-based pyramid schemes) by any measure – leverage, loss rates, aggregate losses, or number of victims.In fact, statistical reports show that joining an MLM makes a bet on snake eyes in a game of craps at Caesar’s Palace in Las Vegas look like a safe bet in comparison. One of the reasons that MLM is less profitable for participants than no-product pyramid schemes is that a sizable percentage of moneys paid into an MLM program goes to the company for products and infrastructure – facilities (often expensive), wages of workers, and salaries (often huge) of executives
