The FTC recently prosecuted three large, mainstream "multi-level marketing" - MLM - companies, members of the Direct Selling Association, triggering speculation about more crackdowns on MLM.
The prosecutions, along with DOJ criminal bribery charges against two Herbalife officials in China, prompt investor angst that MLM growth is in peril. YTD, MLM stocks -21%, S&P +24%.
Negative media on MLM losses, attrition, lack of retailing, and cultism add pressure on the FTC. Regulation has been lax, contradictory, and with many conflicts of interest.
For guidance, wise investors should focus on MLM Politics, not business economics, products and marketing.
The fortunes of investors in the $20 Billion "multi-level marketing" sector hang, by a thread, on current enforcement policy of the FTC regarding Deception and Pyramid Scheme Fraud. Following the unprecedented Herbalife (HLF)