resume esta historia por puntos clave y en español:   ""Abstract   Multi-level marketing companies are hugely successful in the United States of America, with over 18 million Americans selling their products. These companies have faced accusations that they operate as pyramid schemes, an illegal business structure which will inevitably lead to the failure of many participants. This dissertation investigates the similarities between multi-level marketing companies and pyramid schemes, and aims to determine if they partake in the same practices. An additional line of questioning is whether specific groups of individuals are recruited by MLM companies, and the reasons behind this.   Research was undertaken into the existing critical literature around multi-level marketing companies. This critical literature demonstrated that multi-level marketing companies indeed use the same practices as pyramid schemes, resulting in extremely high failure rates for participants. Analysis into three specific companies indicated that specific groups of people are indeed targeted for recruitment, as these companies promote themselves as a solution to various problems faced by these groups. On this basis, it is recommended that stronger legislation should be in place to regulate these companies and ensure they are not partaking in the practices of pyramid schemes. In terms of the recruitment of distributors, there is the need for greater public awareness into the high opportunity for failure within these companies.            3 
  Table of Contents    Acknowledgements ................................................................................................................................................ 2  Abstract .................................................................................................................................................................. 3  List of Abbreviations ............................................................................................................................................. 5  Glossary .................................................................................................................................................................. 6  Introduction ........................................................................................................................................................... 7  Chapter One: Literature Review ....................................................................................................................... 12  Methodology ..................................................................................................................................................... 12  The Formal Legal Position of MLMs in the United States ............................................................................... 14  The Appeal of MLMs ........................................................................................................................................ 20  The Ethicality of MLM Schemes ....................................................................................................................... 22  The Profiling of Individuals by MLMs ............................................................................................................. 25  Chapter Two: Amway and Religious Isolation ................................................................................................. 29  Trust and Televangelism ................................................................................................................................... 30  Amway: More than Just a Business .................................................................................................................. 33  The ‘Cult’ of Amway ......................................................................................................................................... 35  Chapter Three: The Socioeconomic Profiling of Herbalife ............................................................................. 41  Illegal Immigrants in the United States ............................................................................................................ 41  Herbalife: ‘Making the World Healthier and Happier’ ................................................................................... 44  Herbalife in the Latino American Community ................................................................................................. 45  Chapter Four: False Feminism and LuLaRoe ................................................................................................. 52  The Conflict of Working Mothers ..................................................................................................................... 53  Military Wives and Single Mothers .................................................................................................................. 55  The ‘Sisterhood’ of LuLaRoe ............................................................................................................................ 57  Chapter Five: Research Findings ...................................................................................................................... 63  Recommendations for Future Research and Action ......................................................................................... 66  Conclusion ............................................................................................................................................................ 71  Bibliography ........................................................................................................................................................ 72              4 
  List of Abbreviations         ACF Amway Christian Fellowship     CEI Cult Education Institute     DSA Direct Selling Association     FDA U.S. Food and Drug Association     FTC Federal Trade Commission     ICE Immigration and Customs Enforcement     LULAC League of United Latin American Citizens     MLM Multi-level Marketing                    5 
  Glossary   Distributor/consultant/seller – interchangeable terms used to describe someone who sells a MLM product.   Downline – a recruited member of a MLM whose sales generate income for the member who recruited them.   Multi-level or network marketing – a business strategy where products are sold through a network of independent distributors. These distributors are not paid through an hourly wage or salary but by commission and bonuses.   Products – the goods sold by a multi-level marketing company to consumers.     Pyramid scheme – a business strategy which focuses on recruiting people to the company.  These schemes are illegal in the United States of America.     Retention rate – the percentage of people who stay with a company.     Upline – a member of an MLM who has recruited others and gains commission from the sales of their recruits.            6 
  Introduction     Under the United States Federal Trade Commission (FTC), a pyramid scheme is a programme where consumers are promised profits based primarily ‘on recruiting others to join their program’. This purported program involves individuals investing a sum of money, and gaining profit from recruiting others to do the same. This is a scheme that will inevitably fall apart, as ‘no program can recruit new members forever’. 1 This collapse leaves investors unable to recoup their losses. As such, pyramid schemes are illegal and categorised under franchise fraud in the United States. 2   When addressing the characteristics of pyramid schemes, the FTC discusses multi-level marketing companies (MLMs). This is a marketing strategy where the workforce is non-salaried and obtain their earnings via commission sales. The FTC establishes that, unlike pyramid schemes, MLMs can operate as legitimate programs. Their explanation for this is  that MLMs have a real product to sell. 3 However, this is at odds with their description of certain pyramid schemes – where, if the program involves the selling of goods, the product is often used merely to hide the “pyramid structure” of the scheme. This opens up the question of how MLMs actually differentiate from pyramid schemes.            1 Debra Valentine, ‘Pyramid Schemes’. (Federal Trade Commission, 13 May 1998) <https://www.ftc.gov/public-statements/1998/05/pyramid-schemes> accessed 16 July 2019 2 'Pyramid Schemes' (Federal Bureau of Investigations) <https://www.fbi.gov/scams-and-safety/common-fraud-schemes/pyramid-schemes> accessed 15 July 2019  3 Valentine (n 1)  7 
  Dr Jon Taylor, for the Consumer Awareness Institute, published The Case (for and) against Multi-level Marketing. He deemed MLM schemes as ‘a mathematical trick played on the unwary’. He noted the schemes promising significant rewards to those willing to invest time and money, but delivering losses ‘to all but those at, or near the top of a large pyramid’.  4 Taylor’s main focus was on Amway, which was founded in 1959 and is considered one of the first MLM companies. From Taylor’s research, he found that 99% of Amway’s participants received less than $10 a week in commissions. He further noted the average loss rates of MLM participants – 99.6% – compared with the loss rates of those involved in  typical pyramid schemes – 90%. 5 Therefore, MLM distributors are at a greater risk of losing money through these programs rather than typical pyramid schemes.   In May 2008, similar concerns were expressed by Mr Justice Norris, in The Secretary of State for Business Enterprise and Regulatory Reform v. Amway. After governmental claims that Amway favoured recruitment over product sales, Norris’ ruling allowed Amway to continue operating in the United Kingdom. However, he acknowledged that ‘those who did have some success... are the equivalent of one in many thousands’. Amway was allowed to continue only by ‘fairly presenting’ the ‘reality’ of their business, meaning ‘members of the public are free to try and free to fail’. 6 Such a judgement was due to Amway being open to the fact their business model meant thousands would fail after becoming investors. While Amway acted legally in acknowledging the unfairness of their business model, allowing such    4 Jon  Taylor,  The  Case  (for  and)  against  Multi-level  Marketing: The  Complete  Guide  to Understanding the Flaws – and Proving and Countering the Effects – of Endless Chain “Opportunity” Recruitment, or Product-based Pyramid Schemes (Consumer Awareness Institute) 126 5 ibid  6 The Secretary of State for Business Enterprise and Regulatory Reform v Amway [2008] (EWCA Civ 32)   8 
  a business model to continue appears a massive legal oversight. It asks the question why individuals would join MLM companies if they are made to present the reality of their uneven business model.   In 2019 alone, a growing number of media outlets have published exposés on the questionable structures and actions of MLM companies. In April, the BBC published the documentary Secrets of the Multi-Level Millionaires. The program was described as ‘raising concerns about an industry... largely overlooked by regulators and mainstream media’. In particular the documentary highlighted a ‘gap in awareness’ about the potential risks of MLM schemes. 7 Similarly, broadcasting company VICE Media published their own documentary one month later, Why Women Are Quitting Their Side Hustle: Leaving LuLaRoe. This documentary focusing primarily on the collapse of MLM company LuLaRoe, and the tactics in which members were recruited. Alongside the documentary, VICE published a guide on how individuals could help loved ones escape from MLM schemes. The guide labels MLM companies as ‘cult-like’, with investors ‘drinking the MLM Kool-Aid’. This particular phrase was also noted in Jon Taylor’s investigation, in describing the blind devotion of MLM members to their schemes. 8   The publicised criticism of MLM schemes by these major media outlets highlight some awareness of the danger of these schemes. Regardless of this, MLM schemes continue to    7 ‘Secrets of the Multi-Level Millionaires: Ellie Undercover’ (BBC, May 2019) <bbc.co.uk/programmes/p076n2hg> accessed 5 September 2019  8 The phrase ‘drinking the Kool-Aid’ refers to an individual believing in a dangerous idea because of the perceived rewards of doing so, or blind obedience to a cause. It originates from the deaths of 909 individuals involved in the Jonestown cult in Guyana, 1978. At the insistence of cult leader Jim Jones, members died from drinking what was believed to be poisoned Kool-Aid.   9 
  recruit new investors en masse. Secrets of the Multi-Level Millionaires observed that one MLM company, Younique, recruited 130,000 members in only four years. This was coupled with their claim that MLM schemes are often overlooked and are unregulated. This allows for individuals to join these schemes without being aware of the potential risks in doing so. In Jon Taylor’s book, he stressed that the analysis of MLMs were ‘long overdue’. Despite the ‘mountain of opinions’ around the legitimacy of MLMs online, Taylor found that prior to his research, a deep level of research and analysis of these schemes had never been undertaken independently. Those that did exist were often underwritten by MLM companies and were in favour of their practices. While documentaries investigating the legitimacy of MLMs provide much needed insight into their practices, there remains a lack of substantial academic material focusing on the dangers of these schemes. Additionally, there is little to no critical research into the types of people who become involved with MLM schemes.   The purpose of this dissertation is to explain the detriments of becoming an investor within a MLM company. The primary focus will be on American MLM companies Amway, Herbalife and LuLaRoe. It will concisely explain why the practices of MLM companies are all but identical to pyramid schemes, and examine the critical analysis of MLMs prior to my own research. The aim is to add to the critical analysis existing around MLMs by explaining not just how the MLMs operate and take advantage of investors, but how these companies profile and target specific groups to induct to their schemes. While news reports and documentaries have exposed the infiltration of communities by MLM companies, there is little academic research around these practices.     10 
  The aim of this dissertation is to address the illegal practices of these MLM schemes, and how the FTC has regulated their business models. Additionally, it will explain why individuals are enticed into joining MLM schemes and are often unaware of the risks in doing so. The background of these investors, and to which cultural or ethnic groups they belong to, will also be examined. The conclusion reached is that the grey area that differentiates pyramid schemes from MLM schemes based on a product being sold allows these MLM schemes to operate as pyramid schemes, to the detriment of investors. It shall be put forwards that the uneven composition of these companies allow for illegal selling practices and the exploitation of the newest recruits to the schemes. Ultimately, MLM schemes prey on those invested in the idea of the ‘American Dream’. This is an ideal in which upward mobility is universally possible and achieved through sacrifice and hard work. In the case of MLM schemes, the sacrifice and hard work of those investors at the bottom of the period serves only to benefit those of a higher standing in the company.                                  11 
  Chapter One: Literature Review      Methodology    Information used in this dissertation came from a variety of resources. The research was predominately desk-based, as data collection methods such as surveys or interviewing subjects was deemed to be unnecessary. The methodology used was predominately qualitative, focusing on three case studies that serve to explore and justify the hypothesis. The data for these case studies was collected from news reports, documentary films, and lawsuits filed against the companies in questions.   The main research used was Dr Jon Taylor’s The Case (for and) against Multi-level Marketing. As this resource is updated yearly and was the first research of its type not to be unwritten by a MLM company, it provides a unique insight into the business model. While largely critical of MLM companies and believing them to be fundamentally flawed, Taylor acknowledges that there are viable arguments on both sides of the debate. This is due to the fact some individuals will benefit from their involvement in in a MLM company – if they are at a high level within the company. The Case (for and) against Multi-level Marketing acknowledges the potential for success within these companies, however slim this may be.   While journal article and books are referenced, many of the resources used in this dissertation are secondary resources. In Chapter Three, a documentary forms part of the argument presented with regards to profiling. Similarly, Chapter Four’s counter-argument to MLM marketing relies on the testimony of ex-distributors interviewed by news sites such as  12 
  Vice. As secondary resources, the reliability of these sources are susceptible to criticism. The credibility of documentaries in particular may be questioned, given there may be a propensity for documentary makers to further their personal bias. Two justifications for these secondary resources are offered. The first is that many of them are backed by evidence supplied by the MLM companies themselves. For instance, the documentary referenced in Chapter Three uses financial information published by the MLM in question to highlight poor average earnings of distributors. The second justification for secondary resources is the absence of academic research into the recruitment tactics of MLM companies. While critical research has been conducted into the financial risks of joining MLM companies, little has been done in way of researching what individuals are recruited to join these companies. This proved an obstacle in using critical research for the argument that MLMs specifically targets certain groups. To overcome this obstacle, critical research was conducted into the hardships faced by each group featured in the case studies. These hardships are often financial, and the critical research provides an explanation for why these individuals would be motivated to join MLM companies. This research also gives weight to the secondary resources used, as the critical research supports the arguments made in sources such as the documentary of Chapter Three. As the documentary claimed individuals were taken advantage of due to their cultural practices, additional critical research was conducted into these cultural practice to give justification to these claims.   The research methods used allowed a smooth approach to answering the research objective. The second research question – whether or not specific groups of individuals are deliberately recruited by MLM companies – was asked as there is little critical research into this topic. This meant certain challenges had to be overcome, such as ensuring the validity  13 
  of secondary resources used. However, using corresponding critical research ensured these claims could be made without solely using secondary research.   The Formal Legal Position of MLMs in the United States     Multi-level marketing companies began operating in the United States in 1886 with the establishment of the California Perfume Company. This company is today better known as Avon. 9 As of August 2019, MLM companies operate in all 50 U.S. states and are a legal marketing strategy. MLM is a business model in which individuals sign up to be distributors of a product. Their income is not salaried, but instead commission based on the sale of their products. Additionally, they gain a percentage of the sales made by their recruits, known as their downlines. This creates “levels” of distributors, based on how many downlines a distributor has. Herbalife, for instance, has eleven levels in their company, where an individual advances only through recruitment and not sales. 10 MLMs are therefore dependent on recruitment of an endless chain of participants. This is under the assumption  that there is an infinite market for recruitment. 11 As previously stated, despite both focusing on recruitment, the FTC differentiates MLMs from pyramid schemes in that MLMs also have a legitimate product to sell.         9 Alison Bert, ‘Avon updates its look, strategy’ (USA Today, September 2006) <http://usatoday30.usatoday.com/money/industries/retail/2006-09-10-avon-strategy_x.htm> accessed 5 September 2019 10‘Understanding the Sales & Marketing Plan’ (Herbalife) <https://edge.myherbalife.com/vmba/media/D7C922F4-00EF-41B5-9639-55F60464059C/Web/General/Original/SalesAndMarketingPlan.pdf> accessed 5 September 2019 11 Taylor (n 4) 8  14 
    A diagram of a small scale MLM company can be seen below, indicating the levels of recruitment and commission.                      12     Below is a diagram of a pyramid scheme.                     13       12 ‘Multi-level Marketing (MLM) – Marketing Management’ (Wisdom Jobs) <https://www.wisdomjobs.com/e-university/marketing-management-tutorial-294/multi-level-marketing-mlm-9572.html> accessed 5 September 2019 13 Claire Angelique and others, ‘Revisiting the choice model of Ponzi and Pyramid schemes: analysis of case law’ [2013] 60 Crim Law Soc. Change 378   15 
       The regulation of MLMs in the USA can be dependent on the state law. In some states, MLM companies are more stringently regulated. For example, to open a MLM business in Texas an individual must file a financial statement; a description of the program’s compensation structure and promotional materials prior to distribution; and a disclosure of all persons who have a 20% or higher ownership in the company. In the state of Wyoming, they require filing only a Notice of Intent to Conduct Business. 14 As MLM companies operate an endless chain recruitment program, such programs can spread beyond state boundaries. As a result, they are not limited within their original state and can become national or even international corporations. This proves a challenge for states to control the actions of these companies if they go beyond their jurisdiction. Therefore, on a federal level MLM companies are regulated by the FTC.   Much of the legal precedent into the regulation of MLM companies came from the 1979 ruling by the FTC into the business practices of Amway. The two main problems highlighted by the FTC were Amway’s unsubstantiated claims about distributor’s income, and distributors being encouraged to purchase a certain amount of products every month to create an inventory. 15 The ruling concluded that Amway was not a pyramid scheme. This was due to the fact the company did not officially require distributors to buy a large stock of inventory, and these distributors were not directly paid to recruit others. They were    14 David Klein and Jonathan Turco, ‘Multilevel Marketing: How to Avoid Building the Pyramid’ (Verdict Justia, May 2013) <https://verdict.justia.com/2013/05/06/multilevel-marketing> accessed 5 September 2019 15 FTC v Amway [1979] 93 F.T.C. 618   16 
  however found guilty of making ‘exaggerated income claims’ and were ordered to accompany any future claims of distributor income with the actual averages per distributor.  16 This would  acknowledge  that  more than  half  of Amway’s  distributors  do not  make any money, and the average distributor wage (at that time) was less than $100 per month. 17  The ruling also stated that each month, MLM distributors must sell at least 70 percent of the total products they purchased and be able to prove these sales were to a minimum of ten different customers. This precedent was set to ensure MLM companies traded fairly, and could differentiate themselves from pyramid schemes.   Dr Jon Taylor’s The Case (for and) Against Multi-Level Marketing is the most comprehensive critical research into MLM companies thus far. In it, he discussed the outcome of Amway’s case. It was his opinion that the FTC was ‘outfoxed and outgunned’ by Amway in their ruling. This was due to the fact Amway was not named a pyramid scheme on the condition the retail rules imposed by the FTC were upheld. These rules, according to Taylor, were ‘merely given lip service’ and not enforced. 18 This was evidenced in 1986 when Amway were fined $100,000 by the FTC for continuing to misrepresenting the earnings of its distributors. Despite the fine and acknowledgment that they disregarded the 1979 ruling, Amway again were not labelled as a pyramid scheme. 19 The additional conditions of the FTC would also be difficult to enforce. A distributor could easily circumvent them by purchasing the product for their own use – for example, Herbalife has claimed that the majority of their   16 ibid 17 Ibid. With regards to contemporary distributor earnings, Amway’s 2013 ‘Business Reference Guide’ included in its fine print that the average Amway distributor makes $2,424 annually.  18 Taylor (n 4) 33 19 Matt Stroud, ‘Why The FTC Won't Take Bill Ackman's Advice To Prosecute Herbalife (Even Though It Should)’ (Forbes, 22 July 2013) <https://www.forbes.com/sites/mattstroud/2013/07/22/ftc-bill-ackman-prosecute-herbalife/#2ec217867eb6> accessed 5 September 2019   17 
  distributors signed up only to obtain a discount on their products. 20 If a distributor signed up with the intent to make sales, these would again be difficult to regulate. Sales could not be made to ten different customers if the distributor did not have ten customers to make sales to. Distributors could not be penalised by the FTC if they simply did not yet have ten separate customers, therefore circumventing this rule again. Taylor ‘lamented’ the Amway ruling, in the belief that MLM promotors use this precedent as a justification for their programs. A common phrase used by MLM distributors against sceptics is that the company they work for is not a pyramid scheme, as these are illegal. Amway set the precedent for the legality of MLM companies, despite their similarities to pyramid schemes. This corresponds to what Taylor called ‘mounting evidence of misrepresentations in MLM recruitment campaigns’, which disguise high loss rates among participants of MLMs. 21   The Direct Selling Association (DSA) creates further difficulty when attempts are made to legally regulate MLMs. The association was founded by and represents MLM companies, which they call ‘direct-selling’ companies. Jon Taylor suggested that this was coined by MLM promoters to give themselves more legitimacy, and create distance from the idea that they are pyramid schemes. 22 Acting as a public relations group on behalf of companies including Amway and Herbalife, the DSA has faced accusations of trying to limit the power of the FTC. This is with regards to the proposed “Anti-Pyramid Promotional Scheme Act” of 2018. The act was introduced by US Representative Marsha Blackburn, but was largely drafted by the DSA. The Act would “blur the lines” between MLMs and pyramid schemes, as they were   20 Connor Davidson, ‘Staying Short Herbalife: The Discount Customer Argument Does Not Hold Water’ (Seeking Alpha, 7 March 2016) < https://seekingalpha.com/article/3956355-staying-short-herbalife-discount-customer-argument-hold-water> accessed 5 September 2019 21 Taylor (n 4) 4  22 Taylor (n 4) 26   18 
  established in the 1979 FTC vs. Amway case, by approving sales made within the company to distributors. This would have essentially legitimised inventory-loading, and eliminate prosecution of all but ‘the most blatant’ pyramid schemes. 23 The bill was opposed by consumer interest groups including Consumer Action, the Consumer Federation of America and Truth in Advertising among others, and was not passed. 24 However, the DSA previously petitioned the FTC to exempt MLM companies from their revised proposed Business Opportunity Rule. After receiving 17,000 letters of complaint from individuals encouraged by the DSA, the FTC passed the rule in 2012 with MLM companies considered exempt. 25   In addition to considering MLM companies exempt, the Business Opportunity Rule created the current definition of MLM. The definition acknowledged that there is the incentive for MLM members to recruit downlines that they can gain commission from. 26 Taylor expressed his belief that the Rule would be ‘almost totally ineffective’ in preventing abuse from MLM companies. He further considered it an ‘admission by the FTC that it is giving up on its mission to protect consumers against unfair and deceptive practices’. 27 This is due to the fact MLM companies can encourage distributors to focus on recruiting new members, rather than focusing on selling products. As the selling of a product is the key difference between MLM and pyramid schemes, the FTC allowing for the incentive of recruitment further blurs the differentiation between the schemes. The lack of clear definition into MLM    23 Peter Vander Nat,  ‘Why  this  anti-pyramid  scheme  bill is outrageously wrong for  consumers’  (Truth in Advertising, 23 May 2016) <https://www.truthinadvertising.org/why-hr-5230-is-wrong/> accessed  28 July 2019 24 ibid 25 Matt Stroud, ‘How lobbying dollars prop up pyramid schemes’ (The Verge, 8 April 2014) <https://www.theverge.com/2014/4/8/5590550/alleged-pyramid-schemes-lobbying-ftc> accessed 5 September 2019  26 ibid  27 Taylor (n 4) 26   19 
  makes it harder to regulate these schemes. The definition that currently exists allows the potential for MLM distributors to focus only on recruitment, and not on the selling of a product. The products offered by MLMs could thus hide the structure of the scheme – the description used by the FTC in reference to pyramid schemes selling a product.   The Appeal of MLMs     As highlighted in the Introduction, MLM companies are hugely successful in the United States. Amway alone reported sales of $8.8 billion in 2018. 28 Sales numbers such as these are achieved as a result of the thousands of individuals working for the company as distributors.    People join MLM companies for a variety of reasons. The types of people who join – and their reasons for joining – are explored in detail in Chapters Two, Three and Four. Broadly, MLM companies are attractive as they provide an employment opportunity outside of the norm. They are promoted as the alternative to dead-end, 9-to-5 jobs where an individual’s job position may not always be guaranteed. Being part of an MLM means being self-employed, working from home and choosing your own hours: essentially, being your own boss. Becoming a ‘boss’ by joining a MLM company is an easier and inexpensive alternative to creating a business from scratch. Rather than taking years to get a business off the         28 Stefania Palmisano and Nicola Pannofino, ‘It Isn’t Just about the Money: The Implicit Religion of Amway Corporation’ (2013) 16 IMRE   20 
  ground, MLM companies are much easier to join. 29 Requiring a start-up fee is supposedly all it takes to become a boss within a MLM business. In the words of author Richard Kiyosaki:   ‘MLM is said to level the playing field and allow the average person to become financially free. This means not having to punch a time clock, the time freedom to pursue other interests without having to worry about money, and the means to be in control of one’s future. Who would not want all that?’ 30   Individuals are often recruited by a family member or friend. 31 With an existing bond of trust in place, they are likely believe they have been recruited to a genuine employment opportunity. The claims made about these employment opportunites are often greatly exaggerated by MLM companies, who promote themselves as having the potential for ‘virtually unlimited income’. 32 This is despite Taylor’s evidence highlighting the extremely limited income received by the average MLM seller. Distributors are recruited due to this information not being widely available. Taylor acknowledged that his research was the first of its kind, and that information into the pitfalls of MLMs was not widely known. People are recruited to MLMs as the narrative supplied by them is more prevalent than criticism: that joining MLMs allows people to become their own bosses, have freedom over their lives and become wildly successful. The reality is that MLM companies are often both exploitative and unethical in their practices.             29 Taylor (n 4) 3 30 ibid  31 ibid  32 ibid   21 
  The Ethicality of MLM Schemes     Daryl Koehn, in Ethical Issues Connected with Multi-level Marketing, concluded that there are four basic requirements MLM companies must do to be considered legitimate. These are monitoring the performance of their sellers to insure they are making retail sales; have buy-back policies in place so distributors are not left with excess product; charge low upfront fees to begin working with the company; and to ensure the purchase of training materials are voluntary. 33 These requirements would legitimise MLM companies in how they operate, and differentiate their practices from those of pyramid schemes. Koehn also noted that they would ensure MLM sellers were not exploited. Despite this conclusion, her research found that these requirements were rarely met.   The purchase of products by distributors creates the veneer of legality confusing pyramid schemes and MLMs. In theory, MLM distributors will purchase products which are then sold directly to a customer. These products are specifically requested by the customer. In practice, many companies encourage distributors to purchase a vast quantity of products for their inventories. These inventories are built up with the idea that the stock will eventually be sold to a customer. This is known as ‘front-loading’ or ‘inventory-loading’, and creates revenue for the company without the need for retail sales. 34 Money can therefore be made from inventories being sold not through legitimate sales to bona fide customers, but by recruits purchasing products to build up their inventories. Taylor noted that investing    33 Daryl Koehn, ‘Ethical Issues Connected with Multi-Level Marketing Schemes’ [2001] 29 JBE 153- 160  34 James A. Muncy, ‘Ethical Issues in Multilevel Marketing: Is It a Legitimate  Business or Just Another Pyramid Scheme?’ [2015] 14 MER 47, 53   22 
  in products which you do not have orders for is a ‘cleverly disguised means’ of laundering investments, as in typical pyramid schemes. 35 In addition to building an inventory of stock for customers, distributors often partake in this to stay at their sales level. Remaining at their current level triggers their monthly compensation bonus, and can be at the encouragement of their company. One example of a company accused of encouraging inventory-loading is LuLaRoe. Ex-distributors have stated that LuLaRoe recommended salespeople keeping around $20,000 in inventory at any time. 36 This would serve both as an inventory of products to sell to consumers, and maintain the distributor’s sales position. Koehn expressed the belief that companies pressuring distributors to buy goods to retain their status appears a form of coercion upon individuals in weaker positions in the business.  37 Such individuals may not realise it is coercion, instead believing it to be business advice from a seemingly successful upline.   As explained above in ‘The Formal Legal Position of MLMs in the United States’, inventory-loading was investigated in 1979 with the case of FTC v Amway. The company’s higher-level distributors were suspected to be encouraging their downlines to purchase a large amount of nonreturnable inventory. 38 FTC v Amway led to the definition ‘inventory-loading’, and created the FTC’s insistence on the need for a buy-back plan.       35 Taylor (n 4) 165 36 Jonathan Berr, ‘LuLaRoe’s business is booming, but some sellers are fuming’ (CBS News, 2 March 2017) <https://www.cbsnews.com/news/lularoe-multi-level-marketing-women-clothing/> accessed 5 September 2019  37 Koehn (n 32) 156  38 Kevin Thompson, ‘Inventory loading: when does a company cross the line?’ (Thompson Burton, 20 March 2010) < https://thompsonburton.com/mlmattorney/2010/03/20/inventory-loading-when-does-a-company-cross-the-line/> accessed 5 September 2019   23 
  Having a buy-back policy allows for a viable right of exit for MLM participants, and enables them to recoup loses for inventory they have not been able to sell. 39 This provides monetary protection for MLM distributors, but is often difficult to achieve. Koehn noted her interview with one distributor who was told she needed to file a form to obtain a refund. Her uplines repeatedly denied knowing of the form’s existence, until she was finally told the company had “run out” of refund forms. 40 The deflection by the company was likely an attempt to discourage the distributor from seeking a refund. This is an ethically unacceptable delaying tactic. If buy-back policies are offered, strict conditions are often imposed on returns. Most policies are seldom exercised as the majority of MLMs require products to be returned in an unopened condition, and in the original wrapping. 41 MLM companies have also cancelled their buy-back schemes entirely. In October 2017, a lawsuit was filed against the company LuLaRoe due to a reversal of their buy-back policy. Having previously promised a 100% refund with free shipping, the company stopped offering this in the month before the lawsuit’s filing, leaving consultants with thousands of dollars of unwanted inventory. 42   Start-up costs are typical feature of most MLM companies. These usually cover registration fees to open an account with the company; training materials or literature; and either products or samples of products. Amway, for example, have a $62 compulsory ‘welcome kit’ and an optional $84 ‘product kit’. 43 The welcome kit is advertised as the registration fee to   39 Koehn (n 32) 156 40 Ibid 41 Taylor (n 4) 164 42 Brianna Smith, ‘Consultants file lawsuit against LuLaRoe, calling it a pyramid scheme’ (Legal Reader, October 24 2017) <https://www.legalreader.com/24498-2> accessed 20 August 2019  43 ‘Getting Started’ (Amway Global)  <https://m.amway.com/home/AppCat/lcl_mobile_sab_getstarted> accessed 5 September 2019   24 
  begin working for Amway, but also contains the necessary training materials to begin selling the product. As noted by Koehn, this is unethical in that it is a requisite to buy the training materials to begin with Amway. These ‘low’ start-up costs may also be a ruse to deceive regulators. Rather than require higher start-up costs that would trigger enforcement of business opportunity disclosure requirements, MLM companies encourage buying high levels of stock after the individual has joined the company. 44 This allows for the MLM company to profit despite low joining fees, and avoid regulations that high joining fees would impose upon them. In addition to avoiding regulations, low start-up costs may be appealing to those wishing to join the business. This was noted in the previous section ‘The Appeal of MLMs’, as MLM companies seemingly provide a cheaper alternative to starting up a business. Low start-up costs are indicative of this, allowing an individual to “become their own boss” for the cost of only $62.   The ethical requirements of Koehn are not strictly followed by MLM companies. This has resulted in lawsuits, such as the aforementioned October 2017 suit filed against LuLaRoe.   The Profiling of Individuals by MLMs     Dr Jon Taylor noted that there are particular types of people who fall victim to MLMs. One such group are the unemployed or underemployed, who are often struggling and eager to improve their financial situation. Taylor noted that these individuals were “sitting ducks” for MLMs, who are portray their companies as a solution to monetary woes. This was also     44 Taylor (n 4) 165   25 
  observed by Koehn, who described the recruitment tactics of MLMs as promising ‘financial freedom’ where prospective distributors are encouraged to envision becoming ‘wildly successful’. 45 These dreams of success are often unsubstantiated. Taylor’s research found that an average 99.6% of MLM participants lose money, with company purchases and operating expenses costs outweighing any commission received, if any. With his research suggesting that individuals who join MLMs are ‘nearly always’ indebted for the benefit of those higher in the company, he described this strategy as reprehensible. 46   Taylor observed that members of groups or organisations are also targeted by MLM companies. By cultivating close relationships with other members of the group, MLM distributors can be successful in recruiting others through existing bonds of trust. Though this can occur within any community group, it has been particularly observed in religious communities. Called “affinity groups” by Taylor, some evangelical entrepreneurs tie being involved with MLMs to being better able to perform Christian charitable work. One such seminar was named the “Christian Millionaire Mindset Conference”, directly linking religion and monetary success through MLM. 47   Exploitation has been defined as the action of treating an individual unfairly in order to benefit from their work. This definition was furthered by philosopher Karl Marx, who viewed exploitation as value created by workers being appropriated by capitalists. 48 Marx’s definition ties into Taylor’s belief of individuals being targeted by MLM companies for the    45 Koehn (n 32) 159 46 ibid  47 ibid 48 Jonathan Wolff, ‘Marx and Exploitation’ [1995] 3 JE 105   26 
  financial benefit of those running the companies. However, Taylor’s research into the individuals targeted is broad, and does not focus on specific socioeconomic or ethnic groups.   Profiling has been done in numerous fields of law, where an in individual is targeted on the basis of observed characteristics or behaviour. One example is racial profiling in law enforcement, where an individual is under suspicion of committing crime based on their race or ethnicity. Thus, individuals of a certain minority may be targeted and penalised as they are unjustly perceived as potential criminals. For example, American police officers have been observed focusing on African-Americans and Hispanic for drug crimes more so than white offenders. 49 However, profiling has not been conducted in the context of MLM recruitment. Published data by MLM companies shows a trend in companies recruiting a particular group of individuals. Three such companies are Amway, Herbalife and LuLaRoe. With the company promoting Christian conservative ideology, Amway has been described as a ‘quasi-religious corporation’ specifically recruiting religious individuals. 50 Herbalife’s recruits are predominately Latino, with around 64% of their American distributors being from this ethnic group. In the case of LuLaRoe, their distributors are primarily female as the company pushes the idea that they create ‘female bosses’.   The recruitment processes of Amway, Herbalife and LuLaRoe go beyond protected characteristics of race, religion and gender. Individuals recruited to these companies are    49 Bernard E. Harcourt, Against Prediction : Profiling, Policing, and Punishing in an Actuarial Age (2nd edn, University of Chicago Press 2006)  50 David G. Bromley, Quasi-religious corporations: A new integration of religion and capitalism? (Routledge 1995) 137   27 
  being exploited in a way not covered by discrimination law. Rather than being outwardly discriminated against, these individuals are specifically profiled to join companies where the average recruit fails. While the recruitment processes are legal from the perspective of company law, the ethical issues and high chance of financial failure in MLM companies mean these individuals are being recruited in the knowledge they will more than likely fail. There is therefore the need to scrutinise the recruitment practices in light of what appears to be discrimination in relation to disadvantaged groups.                                                    28 
  Chapter Two: Amway and Religious Isolation     In an article entitled Inside ScAmway for the Cult Education Institute (CEI), author Paula Felps described the company Amway as a ‘sham’. Noting low average incomes and a high dropout rate of distributors, Felps conducted an interview with Lori Mauldin, a former distributor for Amway. Mauldin described the company as a ‘right-wing religious group’ ran by ‘cult leaders’. 51 One technique used by higher-ups in the company was “love bombing”, a technique which discourages doubts and reinforces the individual’s nature to belong. This is achieved through isolating individuals, subjecting them to sensory overload and repeatedly stating that they are loved. These are all techniques that Mauldin reported Amway doing. In relation to Mauldin’s account, Felps referenced the memoir of Jeannie Mills, whose writing stated:   When you meet the friendliest people you have ever known, who introduce you to the most loving  group of people you've ever encountered, and you find the leader to be the most inspired, caring,  compassionate and understanding person you've ever met, and then you learn that that cause of the  group is something you never dared hope could be accomplished, and all of this sounds too good to  be true, it probably is too good to be true. Don't give up your education, your hopes and ambitions,  to follow a rainbow. 52          51 Paula Felps, ‘Inside ScAmway: The alluring life offered by the world's largest 'multi-marketing' business closely resembles a sham’ (Cult Education Institute, July 1998) <https://culteducation.com/group/815-amway/1710-inside-scamways.html> accessed 5 September 2019  52 ibid   29 
  Mill’s description of this group was not Amway. It was taken from her memoir Six Years with God: Life inside Rev. Jim Jones’ Peoples Temple. The novel detailed her former membership in the Peoples Temple religious cult before the 1978 mass murder-suicide of 909 of the group’s members. 53 Of all MLMs accused of encouraged their distributors to “drink the Kool-Aid”, Amway has faced the most accusations of cult-like behaviour. This is a claim the company is well aware of. A page on their global website, entitled “Is Amway a cult?”, strongly rebuffs this assertion. They attribute this to their business philosophies and shared goals being ‘misrepresented’. 54 While denying claims of cultism, Amway has been linked to the Christian community since its inception. This has led to allegations that the company deliberately targets this group for recruitment.    Trust and Televangelism     Laboratory studies have shown that there is an empirical association between religion and trusting behaviour. In one such study conducted in 1995, trust was deemed as a costly  investment in a person or entity with the future expectation of return. 55 This was in relation to participants in the study choosing to send money to other participants with the trust their money would be reciprocated. The results indicated that religious participants were the most likely group to both send money and reciprocate what they had received.      53 Andy Kopsa, ‘The U.S. Military Had to Clean Up After the Jonestown Massacre 40 Years Ago. What the Crew Found Was 'Beyond Imagination’ (Time Magazine, 16 November 2018) <https://time.com/longform/jonestown-aftermath/> accessed 5 September 2019 54 ‘Is Amway a cult?’ (Amway Global) <https://www.amwayglobal.com/answers/why-amway-is-not-a-cult/> accessed 5 September 2019  55 Ara Norenzayan and Azim F. Shariff, ‘The Origin and Evolution of Religious Prosociality’ [2008] 211,  58 Science 61   30 
  Additionally, more money was forwarded to individuals perceived to be religious. The findings collate with other such studies where religious individuals are perceived to be more trustworthy than others. In a 2007 study into religious involvement, it was noted that participants who were highly involved in Christianity had greater levels of trust in others. 56 This mirrored the results of the 1995 study in mutually assured trust between Christians.   As stated, the 1995 study deemed trust as investment with the future expectation of return. Traditionally, such investment would be in the religion’s deity. For example, the Biblical book Proverbs states:   ‘trust in the Lord with all your heart, and do not lean on your own understanding… whoever trusts in his own mind is a fool, but he who walks in wisdom will be delivered’. 57  This verse refers to trusting in the Christian God, and faith in Him will be ‘delivered’ in the form of heaven. The notion of trust – and financial trust – is often misrepresented in televangelism. An American phenomenon dating back to the 1920s, televangelists are Christian ministers who preach the gospel through television or radio broadcasts. They can often have an outstanding reach to the general population. For instance, in 2009 Christian network Family Radio owned 216 radio stations across 35 U.S. states. 58 The popularity of their television and radio broadcast can be attributed to their accessibility, as individuals can tune into their sermons without having to travel to a church. Some televangelists have achieved almost celebrity status. One such example is Reverend Frederick J. Eikerenkoetter,    56 Ann Macaskill, ‘Exploring religious involvement, forgiveness, trust, and cynicism’ [2007] 10 JMRC 57 The Holy Bible: King James Version (Box Lea edn, Collins 2011) Proverbs 3:5 – 28:26 58 Scott James, ‘Warnings of the End of the World, Broadcast from Oakland’ The Bay Citizen (May 20, 2011)   31 
  who gained audiences of over two million to his weekly radio sermons during the 1960s. 59 Additionally, his phrase “whatever gets you through the night” supposedly inspired the John Lennon song of the same name. Joseph H. Hellerman noted the unhealthy dynamic of celebrity preachers, where their theology and preaching would often take precedent over the Bible itself. Noting these televangelists would turn the church into a ‘show’, Hellerman expressed concern over the unwavering devotion of some individuals to potentially amoral televangelists. 60 This is due to the potential of individuals adhering to the preaching of televangelists that may actually contradict Biblical teachings.   One criticism faced by televangelists is the teaching of the so-called “prosperity gospel”. This is the belief that a combination of faith in God and donations to religious causes will increase one’s own financial wellbeing. 61 Reverend Eikerenkoetter was an early example of preaching prosperity theology. Through his ‘blessing plan’, he blessed radio listeners who had sent him financial donations and promised that they in turn would be financially rewarded. 62 The prosperity gospel has been negatively described as a reductive version of the American Dream. Those involved have been accusing of lacking compassion for the poor, in the belief that they are financially bereft only through a lack of faith. 63 It is also viewed as exploiting the trust Christians have with their peers and ministers, often for the benefit of those preaching the prosperity gospel. At its core, this ideology is at odds with the   59 Tony Norman, ‘The wretched, venal life of Rev. Ike’ Pittsburgh Post-Gazette (August 4, 2009) 60 Joseph Hellerman, When the Church Was a Family: Recapturing Jesus' Vision for Authentic Christian Community (B&H Academic 2009) 194  61 Matthew Wilson, From Pews to Polling Places: Faith and Politics in the American Religious Mosaic (Georgetown University Press 2007) 140  62 Norman (n 57)  63 Antonio Spadaro, ‘The Prosperity Gospel: Dangerous and Different’ (La Civilità Cattolica, 18 July 2018) <https://www.laciviltacattolica.com/the-prosperity-gospel-dangerous-and-different/> accessed 5 September 2019   32 
  teachings of the Bible. The text, particularly the New Testament, teach against the dangers  of wealth:     Do not lay up for yourselves treasures on earth, where moth and rust destroy ... but lay up for yourselves treasures in heaven, where neither moth nor rust destroys … no one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and money. 64   Several televangelists have combined God and money through MLM schemes. Brazilian  televangelist Rogério Alves da Silva uses his preaching to recruit new members to WishClub,  a MLM who promotes itself as having ‘a great mission to carry out’. BlackDever, a previous  MLM company run by Alves, was closed by Brazilian authorities in 2013 after it was  discovered to be a pyramid scheme. 65 In the United States, there are again links between  MLM companies and televangelists. The Amway Center in Orlando, Florida has offered its  services to numerous televangelists. In June 2019 televangelist Paula White, now spiritual  adviser to President Trump, led a sermon at the center. 66 More directly, televangelists have  taken part in Amway’s rallies to help promote the company. At the time of writing, Amway  is currently the largest MLM in the world by revenue.     Amway: More than Just a Business         64 (n 57) Matthew 6:19–24 65 Joaquín Gil, ‘The murky world of multi-level marketing’ (El País, 18 July 2014) <https://elpais.com/elpais/2014/07/17/inenglish/1405594511_539715.html> accessed 5 September 2019  66 Meagan Flynn, ‘Trump’s spiritual adviser seeks his protection from ‘demonic networks’ at reelection rally’ (The Washington Post, June 2019) <https://www.washingtonpost.com/nation/2019/06/19/paula-white-donald-trump-orlando-rally-demonic-networks/?noredirect=on> accessed 5 September 2019   33 
  Amway (a portmanteau of “American Way”) was founded by Richard DeVos and Jay Van Andel in 1959. The two men had been involved in the distribution of Nutrilite products since 1949, a company which would eventually be absorbed into Amway. 67 The company manufactures over 450 products, which are primarily nutrition and wellness products as well as household cleaners. As of August 2019, Amway is the most profitable MLM company in the world. The company reported sales of $8.8 billion in 2018, an increase in sales numbers from the previous year and the highest of any MLM company worldwide. 68 The success of the company has been well documented. Harvard Business School attributed Amway’s success to the use of ‘an elaborate pyramid-like distribution system’, where independent distributors receive a percentage of their own sales in addition to a percentage ‘sold by recruited distributors’. 69 Harvard were not critical of Amway in their assessment; Richard DeVos was classed by the school as one of the great American business leaders of the 20th century.   Amway has been described as not just a business, but a way of life. 70 The business practices of Amway aim to create a “community” of distributors. This is through constant activities of selling; recruiting new distributors; demonstrating the products; reading motivational materials; attending seminars; and socialising and working with other distributors. This leaves little time for other activities or individuals not involved with Amway. One distributor   67 Palmisano and Pannofino (n 28) 68 ‘Amway Reports Sales of $8.8 billion USD in 2018’ (Amway Global, February 2019) <https://www.amwayglobal.com/amway-reports-sales-of-8-8-billion-usd-in-2018/> accessed 5 September 2019 69 ‘Richard M. DeVos – Leadership’ (Harvard Business School) <https://www.hbs.edu/leadership/20th-century leaders/Pages/details.aspx?profile=richard_m_devos> accessed 5 September 2019  70 Nicholas Demerath, Sacred Companies: Organizational Aspects of Religion and Religious Aspects (Oxford University Press 1998)   34 
  described ‘finding a family [she] never had’ through joining Amway, because of a ‘tremendous amount of love and acceptance’ and a ‘support in growing’ within the organisation. 71 In contrast to other MLM corporations, Amway discourages distributors viewing each other as competition. Instead they are encouraged to celebrate the victories of other distributors. This is sold by the idea that the opportunity for success in Amway is limitless. 72   In reality, the opportunity for success and growth within Amway is extremely limited. Jon Taylor’s 2011 investigation, as discussed in Chapter One, was centred primarily around Amway. He found that 99% of Amway’s distributors receive less than $10 a week in commission before expenses. Additionally, a 1980 Wisconsin suit found that the average net income after expenses for the state’s top 200 distributors was minus $900. 73 Despite such little opportunity for distributor success, the heads of the company are themselves successful, which can be attributed to the company’s business model and practices.    The ‘Cult’ of Amway     Amway has been described as a quasi-religious corporation which links business and family through a gospel of prosperity ideology and an evangelical style organisation. Distributors are often recruited through churches, with Amway affiliating itself with the church by way of the Amway Christian Fellowship (ACF) in 1998. Amway business owners were invited to    71 Nicole Biggart, Charismatic Capitalism: Direct Selling Organisations in America (University of Chicago Press 1989) 86  72 Demerath (n 70) 355  73 Taylor (n 4) 104   35 
  join the new church after being banned from their own for ‘harassing fellow worshipers’ into buying their products. The founder of the ACF, Cecil Coontz, defended the practice of preceding Bible study with ‘a pyramid plan of financial success’. Promoting a relationship between religion and sales, he further claimed that ‘Jesus talks about money more than any other subject. The Lord knew how to close a deal’. 74 The ACF currently operates over 400 churches throughout the United States, where parishioners are encouraged to socialise with one another before pitching their Amway products.   Amway’s founders, the DeVos family, have been described as ‘fervently Christian’, with Richard DeVos encouraging sellers ‘with a message of Christian beliefs’. 75 These encouragements sell the idea of individuals regaining control over their lives through self-sufficient work, and being able to blend work, family and religion together. In one such speech, Richard DeVos described the world as being:   …cram-packed with opportunity. Great moments await around every corner… I believe in life with a large ‘yes’ and a small “no’. I believe that life is good… that God is Good. And I believe in affirming every day that I live, proudly and enthusiastically, that life in America under God is a positive experience. 76   DeVos’ statement is  of  American  life  being  intrinsically  linked  to  the  Christian  religion.  This is the ‘good life’, and  will  result in success for an individual  faithful to God. In Amway,  the Cult of Free Enterprise, Stephen Butterfield accused the company of selling its business as ‘a    74 ‘Amway Christian Fellowship: the Fastest Growing Church in America’ (The Holy Observer, November 2004) <https://www.holyobserver.com/detail.php?isu=v02i05&art=amway> accessed 5 September 2019 75 Bill Vlasic, ‘Amway li: The Kids Take Over’ (Bloomberg, February 1998) <https://www.bloomberg.com/news/articles/1998-02-15/amway-ii-the-kids-take-over> accessed 5 September 2019 76 Demerath (n 70) 353   36 
  cause, a way of life’ by way of the ‘fervid emotional atmosphere of rallies’. 77 Prior to his death, televangelist Robert Schuller was invited by Amway to speak at these rallies. Schuller founded the Crystal Cathedral in 1955, where he preached the prosperity gospel. He used Amway’s rallies to encourage distributors to buy his books, which promoted the relation of the prosperity gospel to Amway. As with Richard DeVos, Schuller made a connection between religion, wealth and Amway. 78 While the prosperity gospel encourages individuals to donate to religious causes, Amway has been accused of supplanting these causes with its business. Rather than dedicating their time and money to the church and family, distributors are encouraged to also include Amway in their mix. There is an analogy made from Amway blending work, family and religion together with the prosperity gospel. Amway, the quasi-religious corporation, can make an individual wealthy through faith and monetary contribution – but rather than an individual becoming wealthy through donating to religious causes, they can become wealthy through selling Amway products. Cecil Coontz described the company as ‘[following] the Great Commission, and [making] great commissions’ as a result of selling to those within the church. 79 Through the ACF, members do not go to church just to worship: the church also provides an opportunity for sales pitches.   In encouraging distributors to participate in activities constantly centred around Amway, this ensures that these distributors are isolated from those not involved with the scheme. Cult expert Jack Levin compared Amway’s techniques ‘on an economic level’ to those     77 Stephen Butterfield, Amway: The Cult of Free Enterprise (Black Rose Books, 1986) 2 78 Ibid  79 (n 74)   37 
  performed by cults ‘on a self-actualisation level’. 80 These include gathering individuals in a common cause, surrounding them with social support, and providing leadership from charismatic individuals who give them guidelines for living. The actions described by Levin mirror the description of the Jonestown cult given by Jeannie Mills. Former Amway distributors have themselves accused the company of being a cult. Speaking to the CEI, one individual explained that they were encouraged to attend four Amway meetings a week, and were urged to set up appointments to sell their products in the remaining three days. When the distributor expressed concern that this left no time to socialise with friends and family outside of Amway, he was told that those people were not his friends if they didn’t join the company. 81 As stated above, Amway’s practices in creating a community of distributors mean that these distributors only have Amway. This includes discouraging distributors from interacting with those outside of the company. While the distributor interviewed by the CEI left Amway, his wife continued selling their products. She was subsequently advised by her sponsor to leave her husband as he would ‘keep her from ever realising her dreams’. When she refused, she was cut off by their supposed friends still involved with Amway. 82   The treatment of the former Amway distributor and is wife is telling of the company’s practices. A comparison can be drawn between the prosperity gospel and the distributor leaving Amway. Those preaching the prosperity gospel believe a lack of faith leads to   80 ‘Amway: The Untold Story: American Journal’ (Cult Education Institute) < https://culteducation.com/group/815-amway/1737-amway-the-untold-story-american-journals.html> accessed 5 September 2019 81 ‘Some factions of Amway use cult tactics’ (Cult Education Institute, March 2002) <https://culteducation.com/group/815-amway/1740-some-factions-of-amway-use-cult-tacticss.html> accessed 5 September 2019 82 ibid   38 
  financial hardship, while Amway distributors dub those who leave the company as “failures” who were not willing to put effort into their business. A common tactic of MLM companies is to explain high failure rates as a result of former distributors not working hard enough. 83 By this logic, the 99% of Amway distributors who earn less than $10 a week in commission are not working hard enough. Nevertheless, a lack of success in the company is deemed a lack of faith and hard work. As the prosperity gospel is accused of lacking compassion, the same could be said about Amway. Such ‘failures’ in Amway often lead to an excommunication from social groups. With distributors solely devoted to Amway socially and isolating themselves from others, they can lose all social groups upon leaving Amway.   Stephen Butterfield described Amway as offering its distributors not only the dream of wealth, but a born-again religious experience and a purpose to live for. It was his belief that Amway was not an inherently evil scheme, and would be honest if all members were fully informed of the likelihood of failure in the company. 84 Given Amway’s success despite this high likelihood – and the fines Amway faced for deceptive practices, highlighted in Chapter One – members are not fully informed. Amway’s practices cannot be definitively labelled a cult. The practices of the company and its distributors do, however, share similarities with the practices of cults. In Rick Alan Ross’ book Cults Inside Out, Chapter 21 is dedicated solely to Amway. Recommending that loved ones of an MLM distributor educate themselves on the concept of thought reform and brainwashing, they should stage an intervention to help the seller leave the MLM. 85 This involves educating them on the flaws in an MLM business   83 Taylor (n 4) 41 84 Butterfield (n 77) 149  85 Rick Alan Ross, Cults Inside Out: How People Get In and Can Get Out (CreateSpace Independent Publishing Platform, 2014)   39 
  structure, and the harm they have observed due to the individual’s involvement with the company. The process recommended by Ross to help individuals leave Amway is the exact same process he recommends when leaving cults like Scientology.   Ultimately, Amway promotes itself as a religious company aiming to bring distributors together with God. There is instead the prevalence of individuals in the company manipulating faith and Biblical teachings to sell their products, and isolating recruits to the company so that Amway is involved with every aspect of their life.                                                 40 
  Chapter Three: The Socioeconomic Profiling of Herbalife      In a 2017 study of the educational trajectories of undocumented Latino youths in the United States, a woman named Patricia was interviewed. Patricia, originally from Mexico, re-entered the U.S. illegally after being deported following a routine traffic stop. 86 Prior to her deportation, Patricia had worked three jobs: in a restaurant, a factory, and as a Herbalife distributor. She was recruited into Herbalife by a cousin, on the basis that ‘if I am deported, I can do Herbalife in Mexico’. 87 Owing to the risk of deportation, Herbalife appeared a reliable and certain form of income for Patricia and her family. In reality, Patricia’s involvement in Herbalife was costly. She began her second and third jobs simply to invest further in Herbalife and to buy a new supply of products every monthly. Ultimately, she quit the company on the basis that her other jobs would ‘get [her] check for sure’. The same could not be said for Herbalife. Patricia is estimated to have invested around $4,000 dollars into Herbalife in only seven months, with minimal returns. 88   Illegal Immigrants in the United States     The financial struggle of Patricia, in her immigration status and role as a Herbalife distributor, is not an isolated incident. The difficulty of illegal immigrants finding work in the United States is both well-documented and historic. In a 1975 survey of 793 illegal    86 Gemma Punti, ‘Echándole ganas: The academic identities of undocumented Latino youth’ [2017] 17 JLE 324 87 ibid  88 ibid   41 
  immigrants apprehended by the Immigration and Naturalisation Service, their average hourly wage was 37% lower than the average wage of all workers in the same industry. 89 Sweatshops were found to be ‘flourishing’ in New York City during the 1990s, where illegal immigrants were ‘willing to suffer long hours, low pay and miserable working conditions’ just to have a job. 90 In addition to such exploitation, illegal immigrants also tend to be disadvantaged in their education. With ‘most’ observed to have ‘low levels of schooling’ and ‘limited fluency in English’, these individuals have little chance of permeating most job sectors. 91 As a result, they have little choice but to take on manual labour work where an extensive education or fluency in English is not required.   If an illegal immigrant is able to achieve a high level of schooling, this does not guarantee advantageous job opportunities. Undocumented youths in the U.S. have been raised under the “American Dream” ideology, which promises social mobility based on academic achievements and hard work. 92 However, given their immigration status, this ideology can be unachievable. A lack of legal documentation – such as a permanent residence card - cause occupational openings to be limited. If they are able to gain employment without their papers, there is the risk of Immigration and Customs Enforcement (ICE) raids. These raids, which focus on finding and detaining illegal workers, have been noted to have racial undertones. On one such raid in Iowa, individuals were specifically stopped and sent to the   89 David North and Marion Houston, ‘The Characteristics and Role of Illegal Aliens in the United States Labour Market: An Exploratory Study’ (Mimeo, Linton and Co. 1976)  90 Alan Finder, ‘Despite Tough Laws, Sweatshops Flourish’ (The New York Times 1995) <https://www.nytimes.com/1995/02/06/nyregion/hard-labor-a-special-report-despite-tough-laws-sweatshops-flourish.html> accessed 28 July 2019  91 Barry Chiswick, Illegal Aliens: Their Employment and Employers (Upjohn Institute for Employment Research 1988)  92 Shannon Gleeson and Robert Gonzales, ‘When do papers matter? An institutional analysis  of undocumented life in the United States’ [2012] International Migration 50   
  42 
  undocumented citizens’ line on the basis that some of their features appeared Latino. 93 Undocumented youths are thus faced with little choice in gaining employment. Higher paid jobs with the potential for upwards mobility may be unavailable due to the absence of legal papers, while jobs that do not require these are more likely to be manual, low-paying, and threatened by ICE raids. Regardless of the individual’s hard work in their academic achievements, they are denied the same job opportunities as their peers due to their immigration status. Youths are unable to fully integrate in the U.S., both legally and economically. 94   The greatest population of illegal immigrants to the United States come from the Americas. In 2012, around 73% of the U.S.’s illegal immigrant population were from Mexico, Central America or South America. 95 Despite the low wages, poor working conditions and risk of detention, one major incentive for immigration to the U.S. is the financial benefits. In a 1978 study of Mexican illegal immigrants in Oregon, farm work gave them net earnings three times that of what they would have obtained in Mexico. 96 As with manual labour,  As undocumented immigrants, they are unable to gain economic improvement by traditional means. Due to their vulnerability as unauthorised citizens of the United States, these individuals are targeted by MLM companies. 97 The occupation promotes itself as one    93 Bill Ong Hill, Institutional Racism, ICE Raids, and Immigration Reform (University of San Francisco 2009) 94 ibid 95 Jeffrey Passel and D’Vera Cohn, ‘Birthplaces of U.S. Unauthorized Immigrants’ (Pew Research, 2014) <https://www.pewresearch.org/hispanic/2014/11/18/chapter-2-birthplaces-of-u-s-unauthorized-immigrants> accessed 5 September 2019  96 Barry Chiswick, ‘Illegal Immigration and Immigration Control’ [1988] The Journal of Economic Perspectives  97 Gemma Punti, ‘Legal Status, Education, and Latino Youths’ Transition to Adulthood’ (Doctorate, University of Minnesota 2013)   43 
  in which a person can work from the safety of their own home, without manual labour or with the need for papers. This prospect is understandably appealing, with companies such as Herbalife seemingly a fantastic alternative to typical employment. The truth of the matter is not so straight forward, or as lucrative as these companies promote.   Herbalife: ‘Making the World Healthier and Happier’     Founded by Mark Hughes in 1980, Herbalife Nutrition is a MLM company which sell dietary supplements and sports nutrition products. Through high-profile sponsorship deals with footballers Cristiano Ronaldo and Lionel Messi, and teams LA Galaxy and FC Barcelona, Herbalife has become highly recognisable in the sporting community. 98 Endorsements such as these cause the brand to be seen as a go-to nutritional supplier. Brand recognition has proved immensely successful for the company financially. Herbalife’s 2017 reported net income was US $214 million, with their total assets amounting to $2.89 billion. 99 This revenue has caused Herbalife to become the third biggest MLM company worldwide. Herbalife currently operates in 94 countries, with around 3.2 million distributors selling their products. 100          98 ‘Herbalife Announces Five-Year Sponsorship Of Real Madrid's Cristiano Ronaldo’ (Sports Business Daily 2012) <https://www.sportsbusinessdaily.com/Global/Issues/2013/06/05/Marketing-and-Sponsorship/Herbalife-Ronaldo.aspx> accessed 24 July 2019  99 ‘Herbalife Nutrition Ltd.’ (Yahoo Finance) <https://finance.yahoo.com/quote/HLF/financials?p=HLF&guce_referrer> accessed 24 July 2019  100 ‘Herbalife Form 10-K Annual Report’ (Herbalife, 2013) <https://web.archive.org/web/20131203090157/http://ir.herbalife.com/secfiling.cfm?filingID=1193 125-13-65327&CIK=1180262> accessed 25 July 2019   44 
  As part of a settlement with the FTC in 2016, Herbalife agreed to a $200 million fine and a ‘restructuring’ of their business model. This followed the FTC’s investigation into accusations of Herbalife operating as a pyramid scheme. It was the opinion of the FTC that it is ‘virtually impossible to make money selling Herbalife products’, with the company focusing more on recruitment than the selling of products. 101 As noted in Chapter One, the FTC differentiates MLM schemes from pyramid schemes based on MLMs selling a product rather that recruiting. With Herbalife’s focus on recruitment and acknowledging the FTC’s issue with their business model, the company’s legitimacy is called into question. The FTC’s investigation into Herbalife’s business model was not the first accusation of the company being a pyramid scheme. As with Amway, these complaints have developed into numerous lawsuits. Their first lawsuit in 2004 – a class action suit on behalf of 8,700 former and current distributors – was resolved by Herbalife paying $6 million to the distributors without admitting guilt. 102 In both lawsuits, the company strenuously deny being a pyramid scheme. While acknowledging problems with their business model, they refused to call themselves a pyramid scheme. Such accusations have also come from the Latino community in the United States.    Herbalife in the Latino American Community             101 Lesley Fair, ‘It’s no longer business as usual at Herbalife: An inside look at the $200 million FTC settlement’ (Federal Trade Commission, 15 July 2016) <https://www.ftc.gov/news-events/blogs/business-blog/2016/07/its-no-longer-business-usual-herbalife-inside-look-200?page=1> accessed 5 September 2019  102 Bill Ackman, ‘Who wants to be a Millionaire?’ (Sohn Conference, New York City 2014)   45 
  A staggering 64% of Herbalife’s distributors in the United States are Latino. 103 There is a notable drive by the company to appeal to this community in particular. Herbalife’s website and customer service lines are maintained in both English and Spanish. Their training materials and brochures are also published in both languages. This is particularly beneficial to immigrants who may only speak Spanish, or feel more comfortable using Spanish rather than English. The language policies are therefore more adaptive and responsive to the needs of immigrants than most other U.S. institutions. 104 This includes schools, with MLM companies appealing to undocumented youths who may believe academic success will not outweigh their immigration status. As no prior experience or education is needed to get a guaranteed role as a Herbalife distributor, this could be seen as more appealing to young Latino immigrants.   Spanish language training sessions for MLM companies allow for the creation of a false sense of solidarity. In November 2010, one speaker was documented as rhetorically asking why the 25 Latino participants had come to the United States. His answer was that ‘nobody comes for the cold… not even because they like it [the United States], but for ‘higher opportunities to earn money, of improving’. 105 The shared experiences of immigration and seeking financial security give a sense of trust among communities. More importantly, they create the sense of trust between the recruits and the MLM recruiter. Manipulative tactics such as this are characteristic of MLM schemes. An individual being encouraged to join a MLM by a seemingly successful up-lines promising a successful support system is only one    103 Annie Correal, ‘Latino immigrants embrace Herbalife’ (Feet in 2 Worlds, 24 May 2010) <http://www.fi2w.org/latino-immigrants-embrace-herbalife> accessed 30 July 2019  104 Punti (n 95) 177 105 Punti (n 95) 178   46 
  example of these tactics. 106 This leads a potential recruit to believe they will be aided in their business by an experienced seller who has already gained wealth and success from the company. Typically, the MLM recruiter promotes only that they aim to help individuals gain success in the company as they already have. These training sessions avoid discussing the fact that the trainer will be the upline to new recruits, thus gaining them further income in recruiting others.   Of course, it should not be assumed that all Latino distributors for Herbalife are undocumented immigrants. Many of these distributors will in fact have legally immigrated to the U.S., or are U.S. citizens by birth. The question of Latino sellers was brought up on the Consumer News and Business Channel in January 2013. In a segment entitled “Selling the American Dream”, executive vice chairman Des Walsh strongly rebuffed claims of Herbalife being a pyramid scheme. In particular, he denied that the company took advantage of the Latino community, stating:   ‘…this is an impoverished, uneducated group. If a supermarket chain opens up a new store in an area that is economically deprived, they're cheered and applauded because they're bringing good nutrition, they're bringing jobs to that community. And yet when we support the Latino community, in some way, this is a company going after people who aren't able to make an educated decision regarding their nutrition. I mean, frankly, it's insulting to us, it's insulting to our customers, and insulting to the entire Latino community.’ 107   In this statement, Walsh negatively generalised the entire Latino community as  ‘impoverished’ and ‘uneducated’. Walsh claimed Herbalife was criticised for supposedly       106 Retno Andriati, Manipulative Cooperation politics of MLM companies in Surabaya city (University of Airlangga 2016)  107 ‘Selling the American Dream’ (CNBC, 18 April 2013) <https://www.cnbc.com/selling-the-american-dream/> accessed 3 August 2019   47 
  going after individuals who cannot make an ‘educated decision’ about their nutrition. In doing so, he avoided discussing the criticism against Herbalife in how they recruit members of the Latino community.   The effect of Herbalife on Latino communities was explored in the 2016 documentary Betting on Zero. The documentary – which alleges that Herbalife is a pyramid scheme – focuses on the work of Julie Contreras. An anti-Herbalife activist, Contreras established the League of United Latin American Citizens (LULAC) in an effort to provide legal aid to  individuals previously involved with Herbalife. 108 The fifteen members of LULAC supported by Contreras are all Latino, with the majority Mexican. In total, the group has lost $171,986.19 on Herbalife investments after being encouraged to build up an inventory of stock. According to Koehn’s requirements highlighted in Chapter One, this practice is considered inventory-loading and thus unethical. Contreras acknowledged that the majority of the group are undocumented, so live in insecurity when it comes to job prospects. She stressed that they are hard workers and pay taxes, and that Herbalife had ‘preyed’ on their ‘lack of knowledge and finances’. 109 These are not the first claims of Herbalife using predatory business practices against the Latino community. John Oliver, host of talk show Last Week Tonight, specifically addressed Spanish-speaking Latinos in a half-hour segment about Herbalife. Discussing the ‘aggressive expansion’ of Herbalife into Latino communities, Oliver sought to warn Latino individuals by stating Herbalife’s claims of ‘entrepreneurial independence and wealth’ were difficult to actually achieve. 110 Additionally, he shared his    108 Betting on Zero (Zipper Brothers Films, 14 April 2016) 109 ibid 110 ‘Multilevel Marketing: Last Week Tonight with John Oliver’ (YouTube, 7 November 2016) <https://www.youtube.com/watch?v=s6MwGeOm8iI> accessed 28 July 2019   48 
  The Conflict of Working Mothers     In their paper Working Mothers, Jayita and Murali Poduval examined the perception of mothers in the workforce. They found some observers would condemn these women as selfish and unnatural, with complaints that juvenile delinquency arises from absent, working mothers. 119 Though there is little evidence to support these claims, women in the workforce contests the traditional belief of women choosing between their family and career. Gender norms result in women continually being viewed as the main caretaker of children, regardless of their employment. Mothers are first looked to on the question of ‘good parenting’, with the misdemeanours of children brought before the court often served to their mothers even if a father is present. 120 Coupled with the Poduval’s findings of working mothers being accused of contributing to juvenile delinquency, women are held to stricter standards in their parenting than fathers, particularly if they are employed.   If a woman is to find work outside the home, there is the issue of their daily domestic tasks. This was a problem noted by the International Labour Organisation Convention No. 156 – Workers with Family Responsibilities. This convention recognised that workers – primarily women – who are responsible for children or other dependents may have difficulty carrying out their work. 121 This is due to the duty of the primary carer to provide sufficient care for dependents while fulfilling work obligations. The carer in this case is often the sole provider     119 Jayita Poduval and Murali Poduval, ‘Working Mothers: How Much Working, How Much Mothers, and Where Is the Womanhood? Some Issues in Women's studies, and Other Essays’ [2009] PMC 63  120 Val Gillies, Marginalised mothers: Exploring working-class experiences of parenting (Routledge 2006)  121 Susan Bullock, Women and Work (Zed Books 1994)   53 
  for dependents. This introduces a further issue in childcare costs if a mother is working and has no readily available child support from family members. Childcare support can often be expensive and can potentially offset the financial benefits of a working parent. 122 In cases where a mother has to work in order to support the family, the cost of childcare is counterproductive.   In many cases, these women work because it is necessary to do so. They may be dependent on their earnings for survival or add an additional income to the household for better living conditions. Alternatively, a mother may return to work to advance her career and maintain her independence. Research has shown that women experience improved psychological well-being when employed, included increased self-esteem and feeling like a better role model for their children. 123 This suggests that at least for a mother, being employed is largely beneficial to her well-being even if she works out of necessity. No matter their reason for employment, mothers face greater levels of predisposed negativity than non-mothers when making career decisions. 124 With working mothers facing expectations of undependability in relation to work focus, and criticisms of leaving their children at home to work, this phenomena has been called the ‘maternal wall’. This refers to the recurring issue of ‘mother’ versus ‘other’, and the “glass ceiling” for women being centred more closely to mothers. 125 This notion of women struggling to maintain or being criticised for having careers outside the home is exploited by MLM companies.   122 (n 119) 123 Andrew London and others, ‘Welfare reform, work-family tradeoffs, and child well-being’ [2004] 53 Fam. Relat. 149.  124 Madeline Heilman and Tyler Okimoto, ‘Motherhood: A Potential Source of Bias in Employment Decisions’ [2008] J Appl Psychol  125 Joan Williams, Unbending gender: Why work and family conflict and what to do about it (Oxford University Press 2001)   54 
     Military Wives and Single Mothers     As highlighted by Wood, the primary target of MLM companies are women. According to the Direct Selling Association, 75% of MLM sellers in the United States are women. 126 One particular subset of these women are military wives. A 2018 report found nearly two-thirds of American military families experienced stress ‘due to their current financial situation’. More than half of this families cited the main reason for this was the non-military partner experiencing unemployment. 127 In total, a quarter of military wives are unemployed. This rate is six times the 2017 national average of unemployment. 128 The high levels of unemployment can be attributed to the aforementioned role of women as caretakers of the family. The military’s child care provision has been found to be inadequate, with the system only satisfying 58% of the assessed need of families. 129 This puts further pressure on military wives to focus on childcare, as the military is not meeting their needs. This may cause these women on giving up on employment entirely in order to care for her family. If this is not the case, an additional explanation for low levels of employment are the frequent moves between duty stations. Military families are moved every few years, with military wives identified as the ‘tied mover’ following her spouse. 130 The job interruptions caused by   126 Casey Bond, ‘MLMs are a nightmare for women and everyone they know’ (Huffington Post, 27 June 2019) <https://www.huffingtonpost.co.uk/entry/mlm-pyramid-scheme-target-women-financial-freedom_l_5d0bfd60e4b07ae90d9a6a9e> accessed 1 August 2019  127 ‘2018 Military Family Lifestyle Survey’ (Blue Star Family, 2018) <https://bluestarfam.org/wp-content/uploads/2019/02/2018MFLS-Comprehensive-Infographic_v2.pdf> accessed 18 July 2019  128 Malikah Dorvil, ‘2017 Survey of Active Duty Spouses’ (Office of People Analytics, 2017) <https://download.militaryonesource.mil/12038/MOS/Surveys/2017-Survey-of-Active-Duty-Spouses-Overview-Briefing.pdf> accessed 18 July 2019  129 James Hosek, Married to the Military : The Employment and Earnings of Military Wives Compared with Those of Civilian Wives (RAND Corporation 2004) 130 (n 127)   55 
  these moves negatively impact a military spouse’s career in slowing their job advancement. Given that their tenure may be short-term, potential employers can be discouraged from employing military wives. If the expected tenure of the job is curtailed, an individual is more likely to accept lower-paid jobs that present fewer opportunities for training and advancement. 131 Ultimately, the nature of the military cases military wives to suffer greater levels of unemployment than the national average, coupled with frequent interruptions in employment and inadequate childcare provisions.   Another group of women targeted by MLM companies are single mothers. As stated above, childcare costs and responsibility create difficulties for working women. This problem is particularly prevalent for single mothers. In research conducted by Action for Children, 52% of new parents reported feeling both lonely and socially isolated. This feeling was most commonly found in new mothers, who reported feeling disconnected from their past life. This is due to feeling ‘shut in with [her] child and shut out of the workforce and adult world’.  132 This problem was exacerbated further for single mothers, who felt further pressured by being an essential household earner with no time to connect with family or friends. The  expense of childcare was again found to be detrimental and contributed to the feeling of social isolation. Women reported feeling forced to choose whether it was economically  viable to return to work, given the cost of childcare and further pressure on the family. 133 If they were to return to work, these obligations along with the needs of their children left  them feeling unable to pursue relationships with others.    131 (n 127) 132 Sophie  Beaton,  ‘Never Alone  But  Always Lonely:  The Social  Isolation of  Being a  New  Mother’ (Social  Connectedness, 2017)  <https://www.socialconnectedness.org/never-alone-but-always-lonely-the-social-isolation-of-being-a-new-mother> accessed 18th July 2019 133 ibid   56 
     The ‘Sisterhood’ of LuLaRoe     The unique and difficult situation these women find themselves in is one easily exploited by MLM companies. The mobile nature of a MLM business allows for constant employment despite frequent relocations or being situated in a remote location. If a military family is relocated to an isolated area, the local demand for labour may be low compared with the available labour supply. 134 As MLM sellers can conduct their business online, their location provides little obstacle. This also appears beneficial to single mothers. Being able to create their own hours and work from home is advantageous for women who are either unable to afford child care, or choose to forgo it to spend more time with their children. 135 These are aspects of their business LuLaRoe promotes. Claiming that individuals have the freedom to turn their business the way they want, sellers will be able to ‘have more time for the ones [they] love the most’ while being driven and successful entrepreneurs. 136 In reality, their claims of empowering women and providing them the tools for a successful business are not wholly altruistic. LuLaRoe is a one such example of this.   Founded in 2012 by DeAnne Brady and Mark Stidham, LuLaRoe is a MLM company that sells women’s apparel. LuLaRoe reported employing around 80,000 independent sellers at its height, with the growth of the company being described as ‘tremendous’. Nearly 40,000 of     134 (n 127) 135 Alexandra Mondalek, ‘Why MLMs are so appealing to Military Spouses’ (Vice, 29 May 2018) <https://www.racked.com/2018/5/29/17377706/multilevel-marketing-companies-military-spouse> accessed 21 July 2019 136 ‘Why LuLaRoe?’ (LuLaRoe) <https://www.lularoe.com/why-lularoe> accessed 14 July 2019   57 
  these sellers were recruited between September 2016 and April 2017 alone. 137 2017 was also the year LuLaRoe was filed its first two class-action lawsuit. The first was filed In February by customers complaining of incorrectly calculated sales tax rates. The second was filed in October by four plaintiffs, who alleged that the company was a pyramid scheme. The lawsuit stated that plaintiffs, who were former LuLaRoe sellers, ‘were encouraged to max out their credit cards with inventory purchases’. 138 This was with the promise of a 100% refund buy-back policy, which was abruptly cancelled. The case’s lawyer Amber Eck described LuLaRoe as acting unlawfully and fraudulently where the company operated as an  ‘up-sell scheme’.  139  As examined in Chapter One, having a viable buy-back plan was one of  Koehn’s  requirements  for  a  MLM  company  to  be  both  ethical  and  legitimate.  The October 2017 lawsuit is currently ongoing.    These are not the only lawsuits LuLaRoe has faced with regard to their business practices. The company’s chief clothing supplier, Providence Industries, filed a suit in December 2018 seeking $49 million for unpaid bills. Their lawsuit claimed the company was ‘insolvent’, with the founders hiding assets in ‘shell’ companies to ‘hinder, delay and defraud the creditors’.  140 More critically, the Washington State Attorney General’s Office filed their own lawsuit against both LuLaRoe and its founders in January 2019. They alleged the company is a      137 Hayley Peterson, 'LuLaRoe is refunding everyone for pants that customers say 'rip like wet toilet paper'' (Business Insider, 25 April 2017) <https://www.businessinsider.com/lularoe-refunds-customers-for-defective-leggings-2017-4?r=US&IR=T> accessed 18th July 2019  138 Stella Lemberg v. LuLaRoe [2017] 5 CA 139 Leah Prinzivalli, 'LuLaRoe Is Getting Sued for Being a 'Pyramid Scheme'' (Self, 19 October 2017) <https://www.self.com/story/lularoe-pyramid-scheme> accessed 18th July 2019  140 Andrew Scurria, ‘Leggings Seller LuLaRoe Hit With $49 Million Creditor Lawsuit’ (The Wall Street Journal, 3 December 2018) <https://www.wsj.com/articles/leggings-seller-lularoe-hit-with-49-million-creditor-lawsuit-1543859998> accessed 20th July 2019  58 
  pyramid scheme and encourage its consultants to focus more on recruitment than sales. 141 As of August 2019, neither suit has been completed.    ‘The Sisterhood’ is a testimonial on LuLaRoe’s website from consultant Katy Napier. In it, she stresses that LuLaRoe is ‘way more than clothes’ and is instead an ‘amazing opportunity’ of sellers who support one another. 142 This is in direct contrast to former consultants, who have complained of the opposite. Ex-LuLaRoe consultant Iliana Ingram complained to vox.com of being ‘sucked in’ by the promise of a ‘sisterhood’. 143 Ingram, a military spouse, joined LuLaRoe at another spouse’s insistence following her husband’s deployment. After losing $3,000 dollars in six months Ingram left the company, and felt she had been duped into joining:  ‘What these companies promise you is sisterhood. A lot of military spouses move so much that it’s really hard to settle in, make friends, and have an outside life like work, so these teams suck people in. They immediately try to be so sweet and generous so you’re blinded by what’s going on.’ 144   A marketing tactic employed by MLMs with regards to both stay-at-home mothers and military wives is preying on loneliness. In corners of the internet devoted to connecting mothers with one another, MLMs have ‘tapped into these networks’ for recruitment. 145 This is with the promise of supportive uplines and a community of women who claim to understand their experiences. Women previously involved with MLMs reported sudden   141 The Associated Press, ‘Washington state attorney general sues LuLaRoe clothing, accusing company of pyramid scheme’ (The Seattle Times, 26 January 2019) <https://www.seattletimes.com/seattle-news/washington-attorney-general-sues-lularoe-clothing-accusing-company-of-pyramid-scheme/> accessed 20th July 2019  142 ‘The Sisterhood’ (LuLaRoe) <https://www.lularoe.com/the-sisterhood> accessed 21 July 2019 143 Mondalek (n 135) 144 Mondalek (n 135) 145 Bond (n 126)   59 
  close relations with other sellers. One former seller named Angela recounted to The Huffington Post of her ‘lonely existence’ as a stay at home mother. 146 She was incentivised to join the MLM as a ‘way to socialise’, and found she suddenly had ‘a new group of best friends’ also involved in the scheme. As with Iliana Ingram, she quickly realised this friendship was false as she was quickly and aggressively encouraged to recruit others to the program. Yet another consultant, Roberta Blevins, recounted her own experience as part of the ‘sisterhood’ in Vice documentary Leaving LuLaRoe. She tearfully recounted that when she left the company, she lost nearly every friend she’d made through LuLaRoe and received abusive messages for her decision to leave. Blevins described LuLaRoe’s business practices as ‘cult mind games’, where women befriend others merely to increase their sales. 147 The experiences of these women contradict the idea of LuLaRoe being a feminist company set to empower women. Instead, women are set at opposition to one another and view one another as business rivals rather than friends. If a woman is to leave the company – as in the case of Blevins – it is seen as a direct insult and betrayal, rather than a personal choice.   Rochelle Burnside, a content management specialist who operates the MLM section for business review site BestCompany, is highly critical of the MLM business model. In particular, she noted the tactics by which MLMs recruit women. She observed companies - particularly LuLaRoe - connecting with ‘the feminist movement to make it feel like this is something that will empower women’. 148 A multitude of the women who have invested in MLMs have done by being sold the idea of independence from the traditional workforce. In    146 Mondalek (n 135) 147 ‘Why Women Are Quitting Their Side Hustle: Leaving LuLaRoe’ (Youtube, 22 May 2019) < https://www.youtube.com/watch?v=L6eujSJ0-RU> accessed 5 September 2019  148 Mondalek (n 135)   60 
  “being their own boss”, the idea of freedom is opened up to women. They can be self-sufficient rather than relying on a spouse; provide for themselves and their family; can grow a successful business; and partake in a network of people who understand them and their experiences. The Huffington Post’s article noted that there is no male equivalent for terms such as “boss babe”, “sheEO and “momtrepreneur”, as men are synonymous with leadership in a way women are not. 149 MLMs encourage the double standard of creating specific labels for women who are bosses. This suggests that women have become these bosses only with the help of the companies, and accomplished this feat that would have been impossible on their own. Women are “momtrepreneurs” and “boss babes” solely because of MLM companies, who suggest their business model is the single route to help women accomplish this. The actuality is that while the company has a $5,500 minimum start-up fee, in 2015 the average annual commission earned by LuLaRoe distributors was $84. 150 Rather than being a successful businesswoman, this meant a sales consultant was earning only $7 a month before expenses. This is without considering that consultants are often encouraged to keep around $20,000 worth of stock on them at any time. 151 This is achieved – as noted by Jessica Wood, and Amber Eck’s lawsuit – by secretly maxing out credit cards. One may consider that the encouragement to keep debts hidden is to avoid arising the suspicion from those who haven’t “drank the MLM Kool-Aid”, and would try to encourage consultants to instead leave the company.         149 Bond (n 126) 150 Hayley Peterson, ‘Inside one of the fastest-growing clothing companies’ (Business Insider, 3 September 2016) < https://www.businessinsider.com.au/lularoe-is-making-millennial-moms-rich-2016-9> accessed 5 September 2019 151 ibid   61 
  Often vulnerable and isolated women are sold the idea of success, but achieve the opposite in the business structure of LuLaRoe. Their website continually stresses the importance of their company to women. They claim to ‘strengthen families’ and support a ‘work-life balance’, and repeatedly caption photos of women with ‘be your own boss’. They are not the only MLM company aimed towards women in both sales and products, but are notable in the egregious use of pseudo-feminism in recruiting women under the guise of a “sisterhood”.                                                    62 
  Chapter Five: Research Findings     In Chapter One of this dissertation, the legal position of MLMs in the United States was examined. Existing critical literature on the nature of MLM schemes was discussed, focusing on Jon Taylor’s The Case (for and) against Multi-Level Marketing and Daryl Koehn’s Ethical Issues Connected with Multi-Level Marketing Schemes. Their critical research examined the ways in which MLM schemes resemble pyramid schemes; why people are enticed into joining MLMs; and how distributors in MLM companies are treated. This led into an examination of groups of people profiled by MLM groups to be inducted into their schemes. Case studies were made of the recruitment tactics of three MLM companies: Amway, Herbalife and LuLaRoe.   In Chapter Two, the relationship between religion and trust was examined. The findings were that Amway links itself to religion to give credence to the legitimacy of the business. The recruited distributors – often joining through church – can be isolated so that they rely on the company socially as well as financially. In Chapter Three, a correlation was made between Latino immigrants struggling to find employment and the recruitment tactics of Herbalife. These tactics seemingly offer a solution to the issues of unemployment and illegal statuses, but instead take advantage of a lack of knowledge into MLM business structures. In Chapter Four, a similar correlation was made between isolated women - particularly military wives and single mothers – and their subsequent recruitment to LuLaRoe, a company who promise both employment and social support under the guise of feminism.        63 
  The result of the research conducted is that the MLM companies are indeed unfair in their practices, resulting in financial hardship for participants. This met the expectations set out in the introduction of this dissertation, and corresponds with the research of Dr Jon Taylor. His statement of MLMs being ‘an mathematical trick played on the unwary’ is reflected in the case studies, where individuals were left in debt as a result of trusting MLMs without prior knowledge. This is particularly notable in Chapter Three, where fifteen former distributors of Herbalife were left with a collective debt of $171,986.19 as a result of joining Herbalife.  152 This was at the recommendation of others in their community, who they presumed could be trusted. Similarly, former distributors of LuLaRoe discussed in Chapter Four complained  of being “sucked in” by the false promises the company had led them to believe. These results indicate both the deceptive practices of MLM companies, and a lack of public knowledge about the detrimental effects of joining these companies.   The research also indicated that the MLM companies included as case studies profile specific groups of people to recruit. This is achieved by responding to the needs of each particular community, and promoting their companies as a solution to specific issues they may face. Herbalife is the most prominent example of this. 64% of distributors being Latino is a result of the company promoting their Spanish-language session and learning materials, and where the business is depicted as one responding to the needs of the Latino community. Rather than simply a coincidence, Herbalife’s recruitment tactics are specifically targeted at the Latino community. In a similar vein, LuLaRoe sells the company as one creating “female bosses” from single mothers and military wives who struggle with     152 (n 106)   64 
  unemployment, with a “sisterhood” to combat the isolation they often face. In Amway’s case, the ACF was created to blend the church with employment. While their message is blending religion, family and work together, this is to the benefit of the company and not their distributors. Ultimately, MLM companies promote themselves as an alternative to typical employment, who work in the interest of individuals struggling with employment. The reality is that these people are exploited by MLM companies, with individuals suffering debt, isolation and legal issues as a result of their involvement with the companies.   Many of the participants to MLM schemes are recruited under false pretences of easy work with unlimited financial benefits. Often they are recruited by trusted individuals – for example, Latino immigrants being introduced to Herbalife by members of their community, as explored in Chapter Three. While some will take deliberate advantage of others, not all MLM participants set out to defraud the individuals they recruit. They are taught that their recruitment techniques are used merely to sell products and build a team. Many of the people doing the deceptive recruiting are themselves victims, having to recruit large downlines to recoup their investments. One reason for the lack of law enforcement action against MLMs is that their victims rarely file complaints. This is due to the fact that the victims of these schemes are often unwitting perpetrators, having recruited family and friends in the hopes of advancement in the schemes. If they were to go public with the complaints, it would be with the fear of consequence from those they recruited, or who in turn recruited them. 153 These recruitments are not always done in bad faith. This was a topic of discussion in Leaving LuLaRoe, the documentary highlighted in Chapter Four.     153 Taylor (n 4) 292   65 
  Courtney Harwood was a distributor who achieved ‘mentor’ status in LuLaRoe after obtaining over 35,000 women as downlines beneath her. She believed the company had the ‘best interests’ of the distributors at heart, and did not maliciously recruit others as she was under the belief they could become as successful as her. Despite her high ranking in the company, Harwood was left in serious debt as a result of LuLaRoe’s business model encouraging her to max out credit cards. 154   The reality of MLMs is that individuals will only benefit if they are at the top of the company pyramid. In 2011 Herbalife’s then-chief executive officer Michael Johnson was the highest paid CEO that year. His total annual pay was around $89.4 million. 155 As discussed in Chapter Three, 98.6% of Herbalife’s distributors made less than $5,000 as their annual pay. Every business will inevitably have a large pay difference between a low-level worker and the CEO. However, it seems inconceivable that in a business model that promotes ‘unlimited income opportunity’, the CEO of a company makes 17,880 times the annual wage of the average worker.    Recommendations for Future Research and Action     The three case studies of Amway, Herbalife and LuLaRoe were explored through three lenses of discrimination and predatory practises. These were Christian groups; the American Latino community; and women, particularly single mothers and military wives. There are,   154 (n 147) 155 Dominic Rushe, ‘Michael Johnson of Herbalife: America’s highest paid CEO in 2011’ (The Guardian, 2 May 2012) ""