This is a list of academic articles and publications from a variety of disciplines (law, economics, business, psychology, anthropology and others) that may be of interest to people researching Multi-Level Marketing (MLM). Some of these articles deal explicitly and entirely with MLM or “direct selling”, some deal with MLM only tangentially, while others do not mention MLM but address topics that may be of interest to MLM researchers, such as financial scams, con games and con artists, behavioral economics or cults. Many thanks to Stacie Bosley and Claudia Groß for suggestions. All errors are entirely my own.
Agbo, Maxime, A Paradox About the Multi-Level Marketing (November 8, 2013). Available at SSRN: https://ssrn.com/abstract=2345287 or http://dx.doi.org/10.2139/ssrn.2345287.
Akerlof, George A. and Shiller, Robert J., Phishing for Phools: The Economics of Manipulation and Deception (Princeton 2015). Psychologists and behavioral economists have found numerous instances in which people do not make the most optimal decisions. The authors, both Nobel prize winning economists, insist that these instances are not merely pathologies or externalities but are inevitable. “Competitive markets by their very nature spawn deception and trickery, as a result of the same profit motives that give us our prosperity.” The authors do not address MLM, but their analysis helps answer one of the key issues of MLM, which is how is it possible that an entire industry could be based on deception.
Antler, Yair, Multilevel Marketing: Pyramid-Shaped Schemes or Exploitative Scams? CEPR Discussion Papers (2018).
Babu, R. R. and P. Anand, Legal aspects of multilevel marketing in India: negotiating through murky waters. Decision (December 2015) 42(4):359–378. DOI 10.1007/s40622-015-0105-1 Available here.
Backman, Claes, and Hanspal, Tobin, Participation and losses in multilevel marketing: Evidence from an FTC settlement, SAFE working paper, No. 207, Goethe University Frankfurt (2019) https://www.econstor.eu/bitstream/10419/203317/1/safe-wp-207_2.pdf
Barkacs, Craig B., Multilevel Marketing and Antifraud Statutes: Legal Enterprises or Pyramid Schemes?, 27 Journal of the Academy of Marketing Science 176 (1997). A brief analysis of Webster v. Omnitrition concluding that whether MLM programs are pyramid schemes will likely be determined on a case-by-case basis.
Beek, Jan, Travelling multi‐level marketing schemes and whispers of fraud in Kenya. Social Anthropology/Anthropologie Sociale (2019) 27, 3 501–516. Available here.
Bhattacharya, Patralekha and Mehta, Krishna Kumar, Socialization in Network Marketing organizations: is it cult behavior?, 29 Journal of Socio-Economics (July 2000). Available here. Most MLM participants make negligible amounts even while their social lives revolve around their participation in the group, leading critics to allege that MLM organizations engage in cultic mind control. The authors attempt to provide an alternate explanation for the social commitment of MLM participants, by developing a purely theoretical model involving both economic satisfaction and social satisfaction. They conclude that at least for some individuals the (presumed) social satisfaction of MLM organizations explains their participation despite the lack of economic rewards. I will confess that the economic equations in this paper are beyond me. But the following assumption made by the authors caught my attention: “Usually, the up-line gets a percentage of the down-line’s output as commission for recruitment. This can lead to speculation that the up-line form these close knit groups to monitor the down-line’s performance. However, our belief is that while these moral hazard arguments are important, these social groups are primarily formed for other reasons. Therefore, to illustrate our point, we assume that the up-line can recruit a down-line agent without any cost and is not compensated for his recruitment efforts. Therefore, in our model the up-line’s payment is independent of the down-line’s performance and depends entirely on his own performance” (emphasis supplied). This assumption, which evidently forms a key part of the model, is utterly contradicted by the reality of MLM compensation plans and recruitment practices. Compensation for recruitment is the sine quo non of every MLM plan. Assuming away an essential feature of MLM renders the authors’ analysis an exercise in futility. In addition, the presumed social satisfaction of MLM participation is questionable. MLM participants may reference social satisfaction or other non-financial benefits of their participation after they have been participating for some length of time, but these reports have the earmarks of a post-hoc justification. I would hypothesize that at the point of initial recruitment the vast majority of participants would cite the financial opportunity as their primary motivation, while some would cite the ability to obtain products at a discount. I doubt that any would refer to social satisfaction as anything other than a secondary benefit, it at all.
Black, Clinton R., IV, The Pyramid Scheme: Don’t Be The Mortar Between The Bricks, University of Baltimore Law Forum, Vol. 12, No. 1, pp. 10-14 (Fall 1981). Summarizes the history of the use of federal and states securities laws to prosecute pyramid schemes, including MLM’s.
Blakey, G. Robert, Expert Report, submitted in The Procter &Gamble Company v. Amway Corporation, Case No. H-972384 (S.D.Tex.) (1998). Blakey, Professor of Law at Notre Dame Law School, was the principal drafter of the federal Racketeer Influenced and Corrupt Organizations (RICO) law. His report methodically analyzes the structure of the Amway organization, including both the corporation itself as well as the high level distributors and their eight “lines of sponsorship” each of which sells “Business Support Materials” to their downline distributors, among other activities. Blakey concludes that the Amway organization parallels the structure of organized crime groups like the Mafia. This report is significant both because Blakey is an unquestionable authority on organized crime and the RICO statute, but also because many MLMs mimic the structure of Amway.
Bloch, Brian, Multilevel Marketing: what’s the catch?, 13 Journal of Consumer Marketing 18 (1996). Available here.
Bosley, S. A., Bellemare, M. F., Umwali, L., & York, J. (2019). Decision-making and vulnerability in a pyramid scheme fraud. Journal of Behavioral and Experimental Economics, 80, 1-13. Available here.
Bosley, Stacie, Greenman, Sarah and Snyder, Samantha, Voluntary Disclosure and Earnings Expectations in Multi-level Marketing, (2019) Economic Inquiry, published online as Early View (https://doi.org/10.1111/ecin.12840). The authors conducted an experiment in which participants were presented with an MLM opportunity; some were provided with earnings disclosures and some were not. They found that while the participants who were provided with earnings disclosures had somewhat reduced earnings expectations, the earnings disclosures did not have a significant impact on their willingness to join the scheme. This study has significant policy implications as the FTC considers whether to require pre-sale disclosures by MLM firms. Should the regulatory focus be on disclosure, or should it be on the structure of the compensation plans which create the extreme imbalance between the numbers of MLM losers and winners? Available here.
Bosley, Stacie & Knorr, Maggie (2018). Pyramids, Ponzis and fraud prevention: lessons from a case study. Journal of Financial Crime, 25, 81-94. Available here.
Bosley, Stacie and McKeage, Kim K., Multilevel Marketing Diffusion and the Risk of Pyramid Scheme Activity: The Case of Fortune Hi-Tech Marketing in Montana, 2015 Journal of Public Policy and Marketing. Another important paper with regulatory policy implications. The authors obtained data from an enforcement action by the state of Montana against the MLM Fortune Hi-Tech Marketing and analyzed how the scheme diffused through the population. The authors discuss various recruitment tactics by MLM firms, including utilizing affinity groups, creating a false sense of urgency, and using testimonial earnings claims and earnings disclosure statements to focus on the possibility of high earnings despite the low probability of achieving such results. The authors make some suggestions for regulators, including early intervention, inoculation efforts and cooling off periods. Available here.
Bradley, Christopher. G., & Oates, Hannah E., The Multi-Level Marketing Pandemic, 89 Tenn. L. Rev. 321 (2022). Available here.
Braucher, Jean and Orbach, Barak, Scamming: The Misunderstood Confidence Man, 27 Yale Journal of Law & the Humanities 249 (2015). Available here. A somewhat rambling but fascinating history of confidence games, and writings about confidence games by journalists, in the mid-19th Century. Traces the origins of the term “confidence man” to a series of articles in the New York Herald in the summer of 1849 about a swindler who expressly asked his victims to place their confidence, and their money or watch, with him. The New York Herald articles formed part of the inspiration for Melville’s novel, The Confidence Man: His Masquerade.
Brodie, S., Stanworth, J., & Wotruba, T. (2002). Direct sales franchises in the UK: a self-employment grey area. International Small Business Journal, 20(1), 53-76. Available here. Note that Brodie was an executive with both Tupperware and Mary Kay. Wotruba received the “Circle of Honor” award from the DSEF in 2000.
Brodie, S., Stanworth, J., & Wotruba, T. R. (2002). Comparisons of salespeople in multilevel vs. single level direct selling organizations. The Journal of Personal Selling and Sales Management, 22(2), 67–75. Available here. Note that Brodie was an executive with both Tupperware and Mary Kay. Wotruba received the “Circle of Honor” award from the DSEF in 2000.
Bundy, Rhonda, Federal Securities Regulations: Do They Adequately Serve Their Prescribed Purpose of Protecting Investors from Pyramid Schemes?, 21 Mem.St.U.L. Rev. 123 (1990-91)
Burch, Jessica, The Pyramid Problem: Regulating Direct Sales at the Edges of Labor and Consumption, 1972-1982, chapter from a forthcoming book, available at https://labor.history.ucsb.edu/sites/secure.lsit.ucsb.edu.hist.d7_labor/files/sitefiles/Burch_Pyramid%20Problem_100418_UCSB%20.pdf
Cahn, Peter S., Consuming Class: Multilevel Marketers in Neoliberal Mexico, Cultural Anthropology, Vol. 23, Issue 3, pp. 429-452 (2008). An anthropologist describes how the aspiring middle class in Mexico buy into the ethos of unregulated capitalism through the lens of multilevel marketing.
Comment, Pyramid Sales Participants: Victims or Perpetrators, 47 Temp. L. Q. 697 (1973-74). https://heinonline.org/HOL/LandingPage?handle=hein.journals/temple4&div=40&id=&page=
Comment, Pyramid Scheme Regulation: The Evolution of Investment Contracts as a Security Under the Federal Securities Laws, 25 Syracuse L. Rev. 690 (1974)
Comment, Pyramid Schemes: Dare to be Regulated, 61 Georgetown L.J. 1257 (1973)
Comment, Regulation of Pyramid Sales Ventures, 15 Wm. & Mary L.Rev. 117 (1973)
Dallinga, Sascha (S.K.), Trained to Stay: How MLMs Turn Learning Into Escalation of Commitment, Nijmegen School of Management, Radboud University Nijmegen (2025). Master’s Thesis, available here
Daniels, Donald, Toward a Uniform Approach to Multilevel Distributorships, 8 U. Mich. J. L. Reform 546 (1975)
Deason, Stephen, Shivaram Rajgopal, Gregory Waymire and Roger White, Who Gets Swindled in Ponzi Schemes? Goizueta Business School, Emory University (2015). Working paper, available at: https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/12962/ponzi%20draft%20may%2013%202015.pdf
DeLiema, M., Bosley, S. & Shadel, D, Multi-Level Marketing as “Gig” Work: Worker Motivations, Characteristics and Outcomes in the U.S., Journal of Labor and Society (2021). Available here.
DeLiema, M., Shadel, D., Nofziger, A., & Pak, K. (2018). AARP Study of Multilevel Marketing: Profiling Participants and their Experiences in Direct Sales. AARP Foundation.
Diep, Francie, Multilevel Marketing has a ‘Goodwill Ambassador’ in the Classroom, Chronicle of Higher Education (Sept. 19, 2022). Disturbing article on how the Direct Selling Association has established the “Direct Selling Educational Foundation” (DSEF) with the goal of promoting the MLM industry. The DSEF provides cash grants and “educational” materials to academics in an effort to improve the reputation of the industry.
Dixon, L. J., Hornsey, M. J., Hartley, N., Chapman, C. M., & Brienza, J. P. (2023). The psychology of
attraction to multi‐level marketing. Journal of Consumer Affairs. https://onlinelibrary.wiley.com/doi/epdf/10.1111/joca.12526
Farber, Daniel, Federal Regulation of Pyramid Sales Schemes, 1974 U.Ill.L.F. 137 (1974)
Gastwirth, Joseph L., A Probability Model of a Pyramid Scheme, The American Statistician, Vol. 31, No. 2 (May 1977). Analyzes a typical MLM distributorship, based on a prosecution by the State of Connecticut against a firm offering dealerships of books offering consumer discounts on various products. While the specific case involved a company which placed a quota on the number of distributorships, the conclusions apply to unlimited schemes. The author concludes that pyramid scheme investors are defrauded as a class. On average, half of the participants will recruit no one and lose all of their money. Only an eighth will recruit three or more, less than one percent will recruit six or more participants, and only one in 16 million will recruit 24 or more. The vast majority have less than a 10% chance of recouping their investment.
Gastwirth, J.L. and Bhattacharya, P.K., Two Probability Models of Pyramid or Chain Letter Schemes Demonstrating that Their Promotional Claims are Unreliable, Operations Research, Vol 32, No. 3 (May-June 1984).
Goffman, Erving, On Cooling the Mark Out: Some Aspects of Adaptation to Failure, Psychiatry: Journal of Interpersonal Relations (1952) https://infofranpro.wdfiles.com/local–files/19520101-on-cooling/19520101%20On%20cooling.pdf
Groß, Claudia and Keep, William W., The Law and Consumer Harm in Multilevel Marketing: A Review, Journal of Marketing Management (2025). Available here. This article does for MLM what Merchants of Doubt did for the “scientists” who attempted to cast doubt on the links between tobacco and cancer and the threat of global warming. The authors carefully and methodically analyze the treatment of MLM in both law journals and marketing journals. They demonstrate how the MLM industry, led by the Direct Selling Association, has corrupted the academic study of MLM by funding research and writing by professors who are willing to ignore the substantial consumer harms caused by MLM, treating it as if were just another category of product distribution, and accepting MLM industry myths concerning retail selling, entrepreneurship and passive income. Absolute first rate, impeccable research by authors who know MLM inside and out.
Groß, Claudia and Vriens, Dirk, The Role of the Distributor Network in the Persistence of Legal and Ethical Problems of Multi-level Marketing Companies, J. Bus. Ethics (2019) 156:333-355. Also available here.
Groß, Claudia and Martin, Hannah, MLM Explained, Book/Monograph (Radboud Repository, 2023). Also available here.
Groß, Claudia, The toxic side of positivity: How MLMs exploit optimism for profit, Wirtschaftspsychologie Heute (October 10, 2024),
Juth-Gavasso, Carol Lynn, “Organizational Deviance in the Direct Selling Industry: A Case Study of the Amway Corporation” (1985). Dissertations. 2316. https://scholarworks.wmich.edu/dissertations/2316
Hock, Branislav and Button, Mark, “Non-Ideal Victims or Offenders? The Curious Case of Pyramid Scheme Participants”, Victims & Offenders, 18:7, 1311-1334 (2023). Available here.
Keep, William W. and Vander Nat, Peter J., Multilevel Marketing and Pyramid Schemes in the United States: An Historical Analysis, Journal of Historical Research in Marketing, Vol. 6, Issue 4 (November), 2014.
Koehn, Daryl, Ethical Issues Connected with Multi-Level Marketing Schemes, Journal of Business Ethics, vol. 29, nos. 1 & 2 (2001).
Liu, Heidi, The Behavioral Economics of Multilevel Marketing, 14 Hastings Bus. L. J. 109 (2018)
Mackenzie, Alexander I., Almost Certain Loss: The Psychology of Pyramid Schemes, unpublished doctoral thesis, University of Canterbury (2005) https://core.ac.uk/download/pdf/35458857.pdf
Micklitz, Hans-W., Monazzahian, Bettina, and Rossler, Christina, Door-to-Door Selling – Pyramid Selling – Multilevel Marketing, A Study Commissioned by the European Commission (November 1999) http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.129.8742&rep=rep1&type=pdf
Muncy, James A., Ethical Issues in Multilevel Marketing: Is It a Legitimate Business or Just Another Pyramid Scheme?, 14 Marketing Education Review (Fall 2004).
Nolasco, Claire Angelique R. I., Vaughn, Michael S. and del Carmen, Rolando V., Revisiting the Choice Model of Ponzi and Pyramid Schemes: Analysis of Case Law, 2013 Crime Law and Social Change 60:375.
Pareja, Sergio, Sales Gone Wild: Will the FTC’s Business Opportunity Rule Put an End to Pyramid Marketing Schemes?, 39 McGeorge L.Rev. 83 (2008)
Peterson, Robert A. and Albaum, Gerald, On the Ethicality of Internal Consumption in Multilevel Marketing, Journal of Personal Selling and Sales Management, Vol. XXVII, no. 4 (fall 2007), pp. 317-323. The authors were funded by Amway and predictably conclude that there is nothing “inherently unethical about distributors in an MLM organization purchasing the MLM firm’s products or services at a discount and personally consuming them.” Their conclusion is based on two surveys, one involving a sample of 400 households, 14% of which included members who worked for a firm that provided products or services at a discount to employees, and the other consisted of 40 personal interviews with national retailers of which only 3 did not offer some type of discount purchase program for employees. (Query why anyone needed to conduct a survey to establish the existence of employee discounts. You might as well conduct a survey to determine that the sky is blue and the grass is green.) The authors completely fail to address the essential problem with “internal consumption” by MLM distributors, which is that MLM compensation plans require distributors to meet inventory purchase quotas in order to qualify to earn commission and to advance in the scheme. As the FTC staff advisory letter dated January 14, 2004 states, if the MLM program is primarily funded by such purchases it is little more than a money transfer scheme, “dooming the vast majority of participants to financial failure.” The failure of the authors to even mention this issue makes their paper worse than useless; it provides academic endorsement of the impossible income proposition of MLM. Amway got what it paid for.
Pratt, Michael G., The Good, the Bad, and the Ambivalent: Managing Identification among Amway Distributors, Administrative Science Quarterly, vol. 45, No. 3 (Sep. 2000)
Kai Prins & Mariah L. Wellman (2023) Dodging negativity like it’s my freaking job: marketing postfeminist positivity through Beachbody fitness on Instagram, Feminist Media Studies, 23:3, 1292-1308
Reingewertz, Yaniv, An Economic Model of Multi-Level Marketing, 2016, available at SSRN https://ssrn.com/abstract=2880470
Solodky, Howard N., Prohibiting Pyramid Sales Schemes: County, State and Federal Approaches to a Persistent Problem, 24 Buff.L.Rev. 877 (1974-75)
Stivers, Andrew, Smith, Douglas and Jin, Ginger, The Alchemy of a Pyramid: Transmuting business opportunity into a negative sum wealth transfer, available here. The authors, who are current or former economists at the FTC, develop a model of MLM which demonstrates the effect of participants’ beliefs concerning demand for the MLM’s products and, more importantly, the probability of successful recruiting. When participants are overly optimistic about successful recruiting the MLM firm can raise prices above the level that would permit profitable retailing. “The recruiting mechanism can potentially be used as a money pump by the firm, funded by payments from participants that are unrelated to consumer value of the product.” Accordingly, the MLM firm, and/or its successful participants, have a “high incentive to deceive participants about the probability of success.” The MLM firm’s ability to raise prices is limited only by the participants’ liquid assets. The authors suggest several policy changes, including prohibiting recruiting (which they note is typically done when the FTC determines that an MLM is a pyramid scheme), limiting rewards to sales that are directly made to non-participants (as was done in the Koscot case), or removing purchase requirements as a condition to eligibility for recruitment rewards.
Stocker, Georgia, An Examination into the Exploitative Nature of Multi-level Marketing Companies, doctoral dissertation, Queen’s University Belfast (September 2019) https://www.researchgate.net/publication/337172323_An_Examination_into_the_Exploitative_Nature_of_Multi-level_Marketing_Companies
Stone, Ralph E. and Steiner, Jerome M., Jr., The Federal Trade Commission and Pyramid Sales Schemes, 15 Pac.L.J. 879 (1983-84)
Vander Nat, Peter J. and William W. Keep, Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes, Journal of Public Policy & Marketing; Spring 2002; 21, 1. http://business.tcnj.edu/wp-content/uploads/sites/219/2014/08/Vander-Nat-and-Keep_MLM-2002.pdf