They discuss exactly this question in a lot of detail. The FTC had started to go after some early MLMs, but then strong lobbying and political connections created a situation where you could have a "legal MLM" by following some rules, and the rules were basically written by Amway.
They discuss exactly this question in a lot of detail. The FTC had started to go after some early MLMs, but then strong lobbying and political connections created a situation where you could have a "legal MLM" by following some rules, and the rules were basically written by Amway.