International Law

Financial Crisis: A Mirror Image of MLM?

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Robert FitzPatrick has an interesting comparison about our current economic crisis and MLM scams.

For those who are asking how our national economy fell into the current financial crisis or how the nation's business leaders could not have seen it coming or how the federal government could have allowed it to happen, a study of multi-level marketing (MLM) - which attracts more than five million Americans each year with its "income opportunity" - can offer answers. MLM serves as a mirror image of the real estate/banking/Wall Street catastrophe.

The basics are all the same. To understand Wall Street's motives and tactics, therefore, we need only look into the MLM mirror." The idea of looking to frauds to explain economic bubbles is an idea that I think is worth looking into.

Much of the current analysis of how to fix the subprime mortgage problem, for example, completely leaves out the role identity theft played in mortgage fraud. Con criminals are attracted to schemes which involve stealing credibility from institutions.

The rise in mortgage fraud should have served as the canary in the mine: if the criminals are now profiting from mortgage sales, it is because they are mimicking or copying institutional practices.

Whenever the institution of trust and reputation, which our modern day markets rely upon, can be subverted easily, it is a signal that some of our institutions need a review.

Read the rest of Robert's article for what he would change, based on his understanding of how MLM fraud works.

Full post as published by Misleading Advertising Law on September 30, 2008 (boomark / email).