Recently LuLaRoe, the company that sells those "buttery soft" leggings, was hit by a 1 billion dollar class action lawsuit, which claims they operate a pyramid scheme. The Federal Trade Commission (FTC) is a government agency that helps protect consumers against scams. On their website, they describe multi-level marketing, which is legal, and pyramid schemes, which are illegal. In fact, they provide the following information about signs that a company is operating a pyramid scheme:
Florida Standards Activities
SS.4.FL.6.3 Describe ways that individuals can either choose to accept risk or take steps to protect themselves by avoiding or reducing risk. As a consumer, how do you protect yourself against risk? Encourage students to conduct research before they make a decision to buy something. When you conduct your own research, how do you determine reliable sources? How can reviews on the company's website show bias? Tell students that they should check many different sources for reviews about the products.
SS.8.FL.2.1 Explain why when deciding what to buy, consumers may choose to gather information from a variety of sources. Describe how the quality and usefulness of information provided by sources can vary greatly from source to source. Explain that, while many sources provide valuable information, other sources provide information that is deliberately misleading. When you want to buy a product and hear the company is accused of unethical practices toward consumers, workers, or the environment, what should you do? When you conduct your own research, how do you determine reliable sources? How can the company show bias? How can accusers show bias? Sort the facts from the emotional appeals on both sides of an argument.
SS.912.FL.2.7 Examine governments establishing laws and institutions to provide consumers with information about goods or services being purchased and to protect consumers from fraud. Conduct some research about past pyramid schemes and other consumer scams. How does the FTC help or protect consumers? What other agencies help protect against fraud?
Deborah Kozdras, Ph.D.