How a man ended up $100,000 in debt — from chocolate
Max Ehrenfreund has a big investigative piece about multilevel marketing companies, which recruit salespeople with the promise that you can make a tidy profit selling chocolate, or protein drinks, or other products. But it doesn't always work out:
These companies are often compared to pyramid schemes, but there is a key difference. A pyramid scheme is an outright fraud where new investors are used to pay existing ones, so if the supply of new recruits ever dries up, or the reality of the situation leaks out, it collapses immediately. These companies, by contrast, are structured around selling actual products, so they are often perfectly legal — and they make the recruits complicit in perpetuating the business, because otherwise they'll have no chance of making good on their investment.
But sadly, according to a legal expert interviewed by Ehrenfreund, up to 99 percent of multilevel marketing recruits will end up taking a loss. The whole story of Martinez and his wife is really worth reading in full.
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Ryan Cooper is a national correspondent at TheWeek.com. His work has appeared in the Washington Monthly, The New Republic, and the Washington Post.
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