Annotated Bibliography

Albaum, G., & Peterson, R. A. (2011). Multilevel (network) marketing: An objective view.
Marketing Review, 11(4), 347-361.
The purpose of this article is to inform potential direct sellers of the risks there are
in MLM companies. There are certain red flags that people must look out for so that they
do not fall for a pyramid scheme which makes people rich who are in the uplink of the
MLM company. Not all MLM companies are pyramid schemes but some are deceitful
and hard to tell. There are several items that will point out a pyramid scheme from a good
company but the main one is the product. If there is no physical product being sold then it
more than likely is a pyramid scheme that will only make the distributor lose money. The
author says that the majority of distributors in MLM companies do not make much
money when they are at the bottom of the pyramid scheme because they run of recruits.
The sole purpose of this article is to open the eyes of people who are looking to start their
business but they must be very careful of what company they get involve in.

The authors purpose is to inform and persuade people to watch out for pyramid
schemes. He wants people to take a step bad and analyze the company and use the
pyramid test. By him telling people to use this test it really helps you clearly point out
pyramid schemes and that is brilliant. That is a very good source to help people open
their eyes even if they do not want to recognize they are in a pyramid scheme. He also is
very persuasive at the beginning of the paper when he gave statistics about how many
direct sellers actually make money in MLM companies. His article was very effective and
to the point which could really help a person who is trying to figure out if they are in an
ethical company or not.

Koehn, D. (2001). Ethical Issues Connected with Multi-Level Marketing Schemes. Journal Of
Business Ethics, 29(1/2), 153-160.
In this article the author points out the unethical practices that some multi level
marketing companies utilize to draw in people. The author speaks about the
psychological and monetary damages people can come across if they enter the wrong
MLM company. He also suggests some certain standards to help distinguish a pyramid
scheme company from a honest MLM company. Some of these important points an
ethical mlm has are having buy-back policies for its distributors, making sales training
material a voluntary purchase, and having low startup costs to sign up with the company.

The author is very effective at explaining what sets an ethical company from a
pyramid scheme company. His concepts are simple yet powerful and anyone can
understand what he is trying to implicate. He also has very strong points when it comes to
the other effects a pyramid scheme can cause on a persons personality and rationality
which makes the article even more powerful.

Marotta, D. (2009). The Fake Lure of Multi-Level Marketing. Business Journal (Central New
York), 23(35), 8.

This periodical shows the negativity that MLM companies are fired with on a
daily basis. This newspaper article is very biased and it has a purpose of discouraging
people from ever entering an MLM company ever. The article talks about the losses
people will sustain if they enter the business and it promises that they will not become

successful and probably will end up in a pyramid scheme. Also this article emphasizes on
the concept that all MLM companies are centered around recruitment.

The author has a strong opinion towards MLM companies and his tactic is to
mudsling these type of businesses. He uses very discouraging scenarios which could lead
to his success in demotivating and lowering peoples morale in any type of direct selling
business. Clearly the author is very opinionated in this article but he backs up most of his
points which leaves both sides of the situation covered. The pros and cons of this type of
business plan are addressed in the article but he is very good at presenting his points with
his strong opinions even if they seem very negative.