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Comment by elil17 | Hacker News Reader

This article doesn’t dig into the details, but these companies are really vicious. They aggressively recruit at my college and I’ve seen them to convince students to take what they would have spent on next semesters tuition and use it to buy “inventory” (i.e. more products than they’ll ever be able to resell) instead. These things ruin people’s lives

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Absolutely -- it's that promise of financial freedom and products that "basically sell themselves" except you're stuck with the inventory because 10 people are working on the same friends to get them to buy Younique mascara.

Actually, MLMs are required to repurchase unsold inventory: https://www.mlmlaw.com/library/cases/mlm/ftc/amway.htm

That's a pretty long document. What section?

I'd love to be able to tell my friend whose wife still has a bunch of LuLuRo leggings.

The doc seems specific to Amway. Perhaps this clause:

> 72. Amway, the Direct Distributor or the sponsoring distributor will buy back any unused marketable products from a distributor whose inventory is not moving or who wishes to leave the business. (RX 331, p. 17B to 18B; CX 847; CX 1076) The buyback rule has been in existence since Amway started. (CX 1041 J) Amway enforces the buyback rule. (CX 847; Brown, Tr. 501213; Bortnem, Tr. 686, 690; Soukup, Tr. 913)

In any case I would not be surprised in the least if your upstream told you to pound sand if you tried to return unsold product, regardless of legal precedent. You have to decide if it is worth your time and money to sue them.

My wife did Mary Kay and they had a clause regarding buy back: They would pay 90% of what you paid to buy it and you'd be blacklisted - you could never by a MK consultant again.

So even if an MLM has that type of program they probably make sure people know it'd be bad for them to exercise it.

> they probably make sure people know it'd be bad for them to exercise it.

The example you cite seems to undermine this claim. If you're doing terribly selling Mary Kay products, you get 90% of your money back and... you can't sell Mary Kay products anymore. Which you couldn't do in the first place; why would you care about being blacklisted?

If people thought about it that rationally, they wouldn't have gotten involved with MLM schemes in the first place.

Most have penalties for repurchasing such as restocking and delivery fees that mean they still make good

That is before going into the psychological pressure applied to distributors to not "fail" by asking for a restock, and the incentive schemes that mean many distributors continue stocking up on unsold goods to maintain commission and reward levels

Interesting they go the route of selling inventory. It must be required to make the thing legit. From what I could see from one meeting I was tricked into attending (it was supposed to be a BBQ and no mention of any sort of meeting) the real product to sell was the high margin learning materials and seminars. That the effort of course goes into recruiting people to sell this stuff to. The guy who invited me did well to place himself as the "church" and "organizer." The rest were suckers being sold on the "community" component. Do your capitalist prayers and good things will come to you. Have faith!

I’ve absolutely seen that too. Just last week a classmate mentioned that she was going to the Bahamas for the weekend. I asked why and lo-and-behold it’s for a training for her “work.” Undoubtedly this was a huge money maker for someone. I understand the appeal, of course - who doesn’t want to be tricked into believing that taking a weekend in the Caribbean is a good idea financially

wow. I'm sure I'm going to get downvoted but, you think mlm is bad but the VC model is ok. How many people have spent countless unpaid hours and who knows how much money working on a "start up" VCs: Let's out source the high risk part of finding product/market fit instead of paying for R&D and then come in at the last minute and collect most of the profits.

or lets look at social networks, its basically mlm but only the network gets paid.

Why shouldn’t the principals of a company that willfully harms so many people’s lives receive a criminal punishment on par with what someone who murders a single person gets?

Because these fools choose to be parted from their money.

How do you craft a law to make this illegal though? And then how do you enforce the law? How do you bring these companies to justice?

A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.

I don't think that's necessarily true. I know plenty of smart people who just didn't know enough about MLMs and had a bunch of people around them who were doing them, and got sucked in. They're smarter now, but these things are really toxic and cult-like.

Simple, if you receive income that is a royalty from the sale of products you sold to the person who ultimately sold them, it's taxed at 100%.

So no more wholesalers? No more commission for sales reps selling through partners?

If that were the law, then the MLM's simple workaround would be to pay you a recruiting fee based on the success of the people you recruit. If the people you recruit sell a lot, you get a bigger fee because you did a better job at recruiting.

I imagine it'll be tough to craft a law to target MLMs because if it's too broad it'll hit many kinds of legitimate business and if too narrow they'll creatively bypass the rules.

The IRS deals with people trying to exploit loopholes like that all the time. The law isn't a programming language.

The companies that make routers sell their products to us this way, through VARs.

Reselling isn't nefarious; network marketing is.

I don't get this common mindset here that people should just be left to the wolves. It's disgusting

Because lots of people here are the wolves, or think that they’re smart enough to become them.

A negative attitude toward those who are gullible enough to be sold on a dream, even though a very small % actually succeed. Ironic being this site is geared towards developers at startups.

> A fool and his money are easily parted. If those students didn't blow their tuition on MLM garbage, they'd have blown it on something else. I'm sure there's a kid somewhere who blew his tuition making ridiculous option trades based on something he read on r/wallstreetbets.

Just because you're getting downvoted, doesn't mean you're wrong. Caveat emptor.

That said, the kids who make the options trades probably lose more than the ones who fall for the MLM scams...

At least there is a chance for success with day trading. You might even learn something along the way.

I notice that most people who are deep into MLMs usually don't have any sales experience. If they had invested the same effort generating leads for a business at least they would learn sales skills they could use to create their own businesses. Not to mention that they would be paid a fair rate for their work instead of loosing money.

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