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There are many disreputable businesses that operate on the idea that you pay them for the privilege of trying to sell their product(s). Is there a common term for this kind of scam; one that could be used without an accompanying explanation?

For example:

Yesterday, John was contacted by a door-to-door sales company. They wanted him to buy sets of knives, then cold call family/friends/strangers. I think this company might be a(n) _____.

Edit: I'm looking for a word or phrase that is specific to this kind of business model.

  • Mixed nouns and adjectives: mock, plaster, counterfeit, bogus, fictitious, phony, facade, bunco, charlatan, flimflam, hoax, swindle, hustle, false front. – Hot Licks Mar 30 '16 at 2:25
  • @HotLicks: Those are some good terms; however, I've edited the question to clarify that I'm looking for a phrase that would be used to explicitly allude to that type of business. – Zach Gates Mar 30 '16 at 2:31
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    You're talking about a pyramid scheme, or its slightly less disreputable cousin, multi-level marketing (MLM). More generically, a sham business may be called a fly-by-night.. – Dan Bron Mar 30 '16 at 2:34
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Based on the specific business model you describe, you might be searching for the term MLM. (Stands for Multi-Level Marketing).

So the entire sentence would read:

Yesterday, John was contacted by a door-to-door sales company. They wanted him to buy sets of knives, then cold call family/friends/strangers. I think this company might be an MLM.

Aside: To set the record straight, not every MLM is a scam. It is just a different business model some companies choose to use as their sales strategy. Many people do (incorrectly, IMO) perceive all MLM companies to be scams, however.

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I think this company might be a sham.

noun: sham; plural noun: shams

1.
a thing that is not what it is purported to be.
"the proposed legislation is a farce and a sham"
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