Refer to Case 11: Frauds of the Century You work at a successful multilevel direct selling company. Recently, critics have accused your firm of being a pyramid scheme. While you award recruiting independent distributors with commissions on the sales of their recruits, an actual product of value is being sold. Some are calling for your company to eliminate its multilevel marketing compensation scheme. You must come up with an answer defending your compensation model and explaining why it is not a pyramid scheme. Be sure to address: What defines a pyramid scheme? How pyramid schemes can last for so long when similar types of fraud often collapse at an early stage How fraud can be identified How organizations can be protected from threats of fraud
Refer to Case 11: Frauds of the Century You work at a successful multilevel direct selling company. Recently, critics have accused your firm of being a pyramid scheme. While you award recruiting independent distributors with commissions on the sales of their recruits, an actual product of value is being sold. Some are calling for your company to eliminate its multilevel marketing compensation scheme. You must come up with an answer defending your compensation model and explaining why it is not a pyramid scheme. Be sure to address: What defines a pyramid scheme? How pyramid schemes can last for so long when similar types of fraud often collapse at an early stage How fraud can be identified How organizations can be protected from threats of fraud
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to Case 11: Frauds of the Century
You work at a successful multilevel direct selling company. Recently, critics have accused your firm of being a pyramid scheme. While you award recruiting independent distributors with commissions on the sales of their recruits, an actual product of value is being sold. Some are calling for your company to eliminate its multilevel marketing compensation scheme. You must come up with an answer defending your compensation model and explaining why it is not a pyramid scheme.
Be sure to address:
- What defines a pyramid scheme?
- How pyramid schemes can last for so long when similar types of fraud often collapse at an early stage
- How fraud can be identified
- How organizations can be protected from threats of fraud
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