Is Multi-Level Marketing a Pyramid Scheme?

MLM is NOT a pyramid scheme.


A pyramid scheme is a rather stupid idea to which many somewhat intelligent people often fall prey. A pyramid scheme works on the principle of using money from members to pay other members. It lures people with the idea of making money just by joining. The concept is that more and more people will join, and you use the money given by the people who join to pay the people who invite them to join. Any moron can see that a pyramid scheme will work for a while but eventually collapse and leave most of its members in financial ruin. A pyramid scheme promotes no product or service of value to its members.

Many people suggest, or state outright that MLM is a cleverly disguised pyramid scheme. This is not so. While the members of an MLM program can be easily represented on a pyramid, all legal MLM programs carry a product of value, and are therefore not a pyramid scheme. The product is what you are paying for first. The second thing you are paying for when joining an MLM program is the opportunity to make money. Your ability to make money with an MLM program depends on many factors.

Related: What factors determine success in multi-level marketing?

Thirdly, by joining an MLM company, you may also receive marketing tools and marketing training, as a bonus, or as part of the package of what you are paying for. For these reasons, MLM cannot be labeled a pyramid scheme.

The rule for success then, is this: If you don’t have need for the product yourself, don’t join the MLM company purely for the money making opportunity.

Related: Why is MLM sometimes called “word of mouth marketing”?

Notify of
Inline Feedbacks
View all comments