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

28 Pages Posted: 9 May 2018

See all articles by Claes Bäckman

Claes Bäckman

Knut Wicksell Centre for Financial Studies; Lund University - School of Economics and Management

Tobin Hanspal

Research Center SAFE, Goethe University Frankfurt

Date Written: April 27, 2018

Abstract

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.

Keywords: Multi-level marketing; Alternative work; Consumer financial protection

Suggested Citation

Bäckman, Claes and Hanspal, Tobin, Participation and Losses in Multi-Level Marketing: Evidence from an FTC Settlement (April 27, 2018). SAFE Working Paper No. 207. Available at SSRN: https://ssrn.com/abstract=3175871 or http://dx.doi.org/10.2139/ssrn.3175871

Claes Bäckman

Knut Wicksell Centre for Financial Studies ( email )

Box 7080
Lund, SE-220 07
Sweden

Lund University - School of Economics and Management ( email )

Tycho Brahes väg 1,
S-220 07 Lund, 223 63
Sweden

Tobin Hanspal (Contact Author)

Research Center SAFE, Goethe University Frankfurt ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
42
Abstract Views
389
PlumX Metrics