Journal of Public Policy & Marketing
multilevel marketing, pyramid scheme, Bass diffusion model, public policy
While statisticians have simulated the expected rate of growth in pyramid schemes, this research examines actual data on the spread of an alleged pyramid scheme in Montana. Fortune Hi-Tech Marketing (FHTM) was a multilevel marketing firm, sued by six states and the Federal Trade Commission and permanently shut down in 2014. Data from a settlement with the State of Montana provide a population of participants in a geographic region with definable markets and offer unique insights into local contagion. The authors analyze the pattern of FHTM adoption within a diffusion-of-innovation framework. The findings confirm that nearly all adoption results from interpersonal influence (i.e., imitation) and indicate that participation is higher in counties with larger economic contractions. The authors add to existing guidance about early indicators of fraudulent activity and discuss intervention and prevention strategies that reflect the imitative nature of this diffusion process.
This is the author's submitted copy before peer reviewed edits. The final, definitive version of this document can be found online at Journal of Public Policy & Marketing published by the American Marketing Association. Copyright restrictions apply. doi: 10.1509/jppm.13.086
Bosley, Stacie A. and McKeage, Kim, "Multilevel Marketing Diffusion and the Risk of Pyramid Scheme Activity: The Case of Fortune Hi‐Tech Marketing in Montana" (2015). School of Business All Faculty Scholarship. Paper 2.