Pyramid Scheme - Connection To Multi-level Marketing

Connection To Multi-level Marketing

The network marketing or multi-level marketing (abbreviated MLM) business has become associated with pyramid schemes as "Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure." and the fact while some people call MLMs in general "pyramid selling" others use the term to denote an illegal pyramid scheme masquerading as an MLM.

The United States Federal Trade Commission (FTC) warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products." and states that research is your best tool and gives eight steps to follow:

1. Find — and study — the company’s track record.
2. Learn about the product
3. Ask questions
4. Understand any restrictions
5. Talk to other distributors (beware shills)
6. Consider using a friend or adviser as a neutral sounding board or for a gut check.
7. Take your time.
8. Think about whether this plan suits your talents and goals

Some believe MLMs in general are nothing more than legalized pyramid schemes.