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Participation and Losses in Multi-Level Marketing: Evidence from an FTC Settlement

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More than 20 million Americans are affiliated with Multi-Level Marketing firms (MLMs), but there is little empirical evidence on who participates in this controversial part of today's labor market. We link data on 350,000 individuals cited in an FTC settlement with one of the largest MLMs to detailed county-level information. We find that participation is greater in areas with higher median income and where women are absent from the labor market, suggesting value in flexible work. However, losses are correlated with higher inequality and lower social capital, suggesting that the pitfalls accrue to vulnerable groups.

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  • Bäckman, Claes & Hanspal, Tobin, 2018. "Participation and Losses in Multi-Level Marketing: Evidence from an FTC Settlement," Working Papers 2018:13, Lund University, Department of Economics, revised 22 Aug 2019.
    • Handle: RePEc:hhs:lunewp:2018_013
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    Cited by:

    1. D. Raval, 2021. "Who is Victimized by Fraud? Evidence from Consumer Protection Cases," Journal of Consumer Policy, Springer, vol. 44(1), pages 43-72, March.

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    More about this item

    Keywords

    Multi-level marketing; Alternative work; Consumer financial protection;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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