CFA Opposes “Anti-Pyramid Promotional Scheme Act of 2016”

Consumer Federation of America has joined a number of consumer organizations in opposition to H.R. 5230, the “Anti-Pyramid Promotional Scheme Act of 2016,” which is currently pending before the House Energy and Commerce Committee. Although multi-level marketing (MLM) organizations may provide a legitimate business opportunity to some consumers, many MLMs are in reality illegal pyramid schemes. The FTC has consistently stated that a critical difference between a legitimate MLM business and a pyramid scheme is that an MLM succeeds primarily by retailing products and services. Yet, H.R. 5230 makes numerous changes designed to make it harder for the FTC to challenge illegal pyramid schemes, placing consumers seeking small business opportunities at grave risk of being taken for a ride.