Shifting the Risk: " buyback"="" protection="" in="" network="" marketing="" schemes"="

One of the key features of the legal regulation of Network Marketing schemes around the world is "buyback" – the statutory duty of firms to repurchase the unsold stocks of distributors leaving the scheme. Although this seems an eminently reasonable approach to the problem of would-be entrepreneurs being persuaded to part with their life savings, in practice "buyback" provisions are widely avoided. More seriously, though, "buyback" ultimately exposes consumers to still greater levels of risk. Also exposed are banks, suppliers, and employees. The paper evaluates a number of alternative approaches to deal with the anomaly, recommending a pragmatic combination of regulatory control and "best practice."