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NCL says all Direct Sales are Pyramids

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Newswire story from Fraud.org about the rise of pyramid schemes:

With nearly a third of Americans saying the current recession has made them more likely to consider a home-based business offer, consumer advocates have issued a warning that fraudulent pyramid schemes disguised as legitimate business opportunities are posing a greater threat than ever to consumers' wallets and financial health.

While "pyramid" and "Ponzi" schemes have received some media attention recently, with Bernard Madoff's allegedly fraudulent investment scams making headlines, it's clear that even the most sophisticated consumers are vulnerable to business opportunity scams.

Today the National Consumers League (NCL) announced the findings of an Opinion Research Corporation (ORC) survey and launched new resources at www.fraud.org aimed at helping consumers spot and avoid risky business "opportunities."

Here is NCL's picture of what type of claims an pyramid scheme will make.

Of course the message doesn't seem to have penetrated the Shop to Earn crowd.

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May be it is because NCL is somewhat confused itself about the difference between "legitimate" multi level marketing and a pyramid scheme.

On their page entitled MLM's and Pyramid Schemes: What's the difference?, NCL purports to explain the difference between a legal scheme and an illegal scheme.

One "helpful" hint is that a legal MLM sells "Household goods or services that consumers typically use in everyday life. Goods and services are priced competitively with traditional retail outlets."

I would like to know one member of the Direct Marketing Sales association that "sells household goods or services at traditional retail outlet prices.

They aren't any, in my opinion.

From this, we can conclude that the NCL thinks all Direct marketing has at least one red flag?

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Full post as published by Misleading Advertising Law on February 27, 2009 (boomark / email).