Reducing deceptive income claims in the MLM industry – a never-ending task?

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Issues in the Multi-level industry have been going on for decades, and legislators have taken several countermeasures so far. But despite such countermeasures, the problem of MLM companies making deceptive income claims persists. Therefore, it is of interest to explore why the countermeasures are not effective against deceptive income claims made by MLM companies. This research aims to better understand why deceptive income claims are continued to be made despite the imposition of countermeasures. This research uses a MLM company as a case study. To help answer the research question, distributors from this company were interviewed and a recruitment meeting was attended. Based on the gathered data, this study identified different types of deceptive income claims as well as the countermeasures this MLM company took. The results also highlighted four reasons why deceptive income claims continue to occur: the dual role of distributors, the compensation structure, the lack of control from headquarters and the rapid involvement of distributors in the recruitment process. Based on the results of this study, we conclude that due to the specific structure of MLM companies, deceptive income claims will persist in the future.
Faculteit der Managementwetenschappen