Network marketing (Multi Level Marketing companies, or MLM) should not be confused with Pyramid Selling.

The difference between legitimate Direct Selling Companies and illegal pyramid schemes:

A pyramid scheme
It is an illegal business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service.

  • Pyramid Scheme – Fraudulent scheme
  • Pyramid schemes usually promise to get extraordinarily high profits very quickly and easily
  • Usually a very large fee should be paid before return might be received
  • Participants in a pyramid scheme make money primarily from enrollment fees rather than by selling products
  • Pyramid schemes use only speculation, no real product is sold
  • There is no product except a fake investment
  • Pyramid schemes are an illegal form of business

Multi-level marketing – a Marketing Strategy
In multi level marketing business people are building up their structure  of customers who love and use the products, which is the key to a stable success

  • One difference is that members at any level of a multi-level marketing model can theoretically make income through the company’s products and/or services without signing up any new member
  • Another difference is that members of any level in a multi-level can earn more than the people who signed them up
  • MLM is usually used as a channel for selling tangible products
  • There is little or no enrollment fee. Usually in the form of starter kits or catalogs
  • Finally, multi-level marketing companies are legal

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