eli5 How do multi-million dollar pyramid schemes stay around for so long?

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The company’s that everyone knows are MLM trash (HerbaLife, JuicePlus, ect). When I was looking for a job I naively joined a seminar discussing CutCo Knives. Come to find out these dud muffin companies have been around since my mom was growing up, and are somehow still operational? Wouldn’t the BBB or whatever business bureau operates in the US (FTC?) have these scams shut down by now? I understand that new ones are popping up all the time but im referring to the ones that have been around forever now.

In: Economics

41 Answers

Anonymous 0 Comments

Because although you might find their business models annoying or distasteful, they’re not *actually* pyramid schemes.

I know people are going to knee-jerk downvote this, but a pyramid scheme is a very specific thing that relies on new members to stay afloat and that will inevitably collapse—as in, it’s a mathematical certainty. Conversely, the companies you’re talking about produce a real product and exchange it for real money—the fact that that exchange happens peer-to-peer instead of via a more traditional model doesn’t change that.

Of course, you don’t have to like them or do business with them, but that’s the answer to your question.