Some sources say that all MLM companies are essentially pyramid schemes, even if they are legal. The U.S. Federal Trade Commission (FTC) states: "Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They're actually illegal pyramid schemes.

Is MLM a pyramid scheme?

What's the difference between an MLM and a pyramid scheme? Pyramid schemes are illegal. ... An MLM might have a similar pyramid structure, however, a legitimate MLM will sell an actual product and it should be possible to make some money (although not necessarily much) without having to recruit others to the MLM.

What is the difference between pyramid scheme and MLM?

Multi-level Marketing (MLM) or network marketing, is individuals selling products to the public - often by word of mouth and direct sales. ... The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme.