Multilevel Marketing Vs Pyramid Schemes

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a down line of distributors and a hierarchy of multiple levels of compensation. Other terms for MLM include network marketing, direct selling, and referral marketing.
The products and company are supposed to be marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing. People usually see this genuine business model in connection with the pyramid schemes that are very common in the market.

A pyramid scheme is a non-sustainable business model that involves promising participant’s payment primarily for enrolling other people into the scheme, rather than from any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.

Lets distinguish this first before we go ahead with the concept of network marketing.