One of the online business models that has received a lot of undue criticism is multi level marketing.  This is largely due to the association many people make between it and Pyramid Schemes.  Multi level marketing is not pyramid schemes—in and of itself, it’s a legitimate online business.

Pyramid schemes are a form of multi level marketing—but not the thing itself.

All multi level marketing follows a payment style that involves a commission paid to you for sales that people that you’ve recruited make.  Whether it’s a pyramid scheme or a legitimate form of multi level marketing, the same is true in every case.  The ultimate distinction between legitimate MLM and pyramid schemes is in what’s actually being sold.

Multi level marketing sells products, pyramid schemes sell selling.

Whenever you sell an actual product or service to a customer, your MLM business is legitimate.  If all you’re selling is the ability to be a sales representative for the company, you’re in a pyramid scheme.  This is the vital distinction between the good MLM companies and the bad ones.

With that said, you will, of course, be able to sell electronic “non-tangible” products such as ebooks, videos and audio recordings.  You can even sell memberships to the company, as long as it comes with some value, such as gym memberships, attendance to self help seminars and so on.  This is where things get a little dicey, but there are legitimate MLM’s that do exactly that.

Legit MLM’s aren’t just legal, they’re sustainable–unlike pyramid schemes.

Your main concern with getting involved with an MLM may simply be whether it’s legal or not.  While this is a valid concern, it’s not the only thing you should be worried about.  Pyramid schemes, unlike the structures their name suggests, do not stand up over time.

The problem of entering pyramid schemes is that besides ripping people off, you yourself can easily get ripped off.  Unless you’re one of the first few people who join the scheme, it’s statistically impossible to make money at it.  You pay in, and get absolutely nothing in return.

Because of the intangible product, which causes a good deal of the instability of the structure, it tends to fall before anyone can get anywhere with it.  Anyone, that is, except the few people that started it.  Of course, they have the continued concern of getting busted for the scam.

The ultimate rule of avoiding pyramid schemes but still being able to use multi level marketing lies in the product.  If you find that you would be selling the company, but not any product, you can bet it’s a pyramid scheme.  Avoid this situation, and you will only find the legitimate multi level marketing groups.

Highlight any portion you want: