Multi-level marketing is counter-cyclical: Sign of a pyramid scheme?


In order for multi-level marketing companies not to qualify as pyramid schemes, you have to believe that people participate to acquire products. Skeptics, including myself and WalletPop's Tracy Coenen, believe that in many cases, the products simply serve as cover for a scheme that is not different from a chain letter in any meaningful way.

The strength of multi-level marketing recruiting efforts in times of economic weakness and uncertainty seem to reinforce my belief that these "business opportunities" are little, and often nothing, more than endless chain recruitment schemes.

In 2002, Entrepreneur columnist Michael L. Sheffield responded to a reader who was worried that her network marketing business would suffer in step with the general economic malaise that was gripping the country at the time: