Economy

John Oliver: Why Congress Won't Shut Down Pyramid Schemes That Destroy People's Lives

"There's actually a direct selling caucus in Congress with more than 40 bipartisan members."

Photo Credit: YouTube

By now, you've probably heard of at least a few multi-level marketing (MLM) schemes just from your friends on Facebook. 

"Companies like Mary Kay, Rodan+Fields, Nu Skin, Amway and Herbalife," "Last Week Tonight" host John Oliver rattled off in his latest segment.

"They sell different products, but generally MLMs have two main things in common. First, you don't see them on store shelves; you buy them through distributors... and secondly, those distributors are always looking for more people to join them," Oliver explained. 

That's why your friends and family members involved in MLMs have probably tried to entice you to get involved in the company through social media. But Oliver breaks down the pyramid schemes of these businesses, warning wishful entrepreneurs not to get suckered by MLMs: “They’re f*cking awful," he concluded.

Despite decades of allegations of fraud and racketeering, it is hard for the FTC to investigate these companies. The other major hurdle in bringing them down is their surprising lobbying strength. 

"There's actually a direct selling caucus in Congress with more than 40 bipartisan members, including Jason Chaffetz, who worked at Nu Skin for more than a decade," pointed out Oliver.

As for Herbalife, which paid a $200 million settlement in July, it's now lying low on the radar with help from Washington. 

"[Herbalife has since] recruited two former top FTC officials to work for the company, and it's willing to be incredibly petty as well," Oliver explained after playing a clip featuring Herbalife victims from an upcoming documentary called Betting on Zero.

"When it played at a DC film festival earlier this year, the screening had 173 empty seats because an Herbalife lobbying firm reportedly bought them out," Oliver explained.

Oliver added that, "even if the government did decide to crack down on this industry, which seems unlikely, many MLMs have been expanding overseas."

Take Herbalife, whose sickeningly upbeat commercial in India isn't just deceptive, it's downright unnerving.

"They are lucky Gandhi isn't alive to hear [the] song [played in the spot] because it would really test his belief in nonviolent protests," remarked Oliver. "You know what, f*ck it, everybody pick up a rock and meet me at Herbalife."

Watch:

Alexandra Rosenmann is an AlterNet associate editor. Follow her @alexpreditor.

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