Work At Home Information

There is almost no dirtier word than “multi-level marketing,” or MLM,  in the work at home sphere.  When you hear or see the word, MLM,  impressions of pyramid schemes immediately come to mind. In fact, people often view MLM as synonymous with “pyramid scheme.”

While it is true that some MLMs are pyramid  schemes,  not all of them are,  and conflating the two is, in fact, erroneous. Before going any further into this, it might be useful to define some terms:

From Wikipedia:

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, often without any product or service being delivered.

From Wikipedia:

Multi-level marketing (MLM), (also called network marketing) is a term that describes a marketing structure used by some companies as part of their overall marketing strategy.

The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduced to the company, creating a downline of distributors and a hierarchy of multiple levels of compensation.

So while a pyramid scheme may have a similar structure to MLM,  they are not one in the same.  The difference is that in an legitimate MLM,  promoters are paid a commission for products (the products must have real value) they sell and a percentage for the products their recruits sell whereas in a pyramid scheme there is often no product, or if there is a product, it has no real value other than to act as a recruitment tool.

Examples of legitimate companies that use the MLM structure are Amway and Global Domains, Inc.

If you are unsure whether an MLM is legitimate, apply this test:  does the product being sold have intrinsic value; that is,  is the product worth something outside of the opportunity? If the answer is no, then the opportunity is a pyramid scheme and should be avoided. If the answer is yes, then the opportunity is legitimate.

In closing,  the MLM model is a legitimate way of organizing a sales team in such a way that everyone is rewarded for working together, and is not synonymous with pyramid schemes.  While some MLMs might be pyramid schemes,  pyramid schemes are not always MLMs.