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MLM … Pyramid Scheme or Legitimate Business?

Multi-Level Marketing (MLM) is an extremely disputed subject. It is condemned by some as all a complete rip-off and others affirm it is all good. What’s the truth? Read on…



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Since we started posting MLM reviews on our reviews tab, the reaction of commenters to them have been mixed.

Whether the review we post is positive or negative, many people will say, “MLM didn’t work for me so I will never work with this company.” Or, “MLM des not work. So I’m not into it. Period.”

But when the review is positive a few state, “I made money with this company and I’ll continue working with them.” Or, “I made money with another MLM company and I will consider signing up with this one too.”

Well, what is it that gives MLM business opportunities such chequered opinions?

Here is the truth behind Multi-Level Marketing…


MLM is not forcibly a fraudulent scheme

MLM in and of itself is not a fraud, Ponzi or Pyramid scheme, or anything of the sort. It is an effective and extremely legitimate way to do business. In fact, nearly every company has at least some aspects or resemblance of an MLM, whether they admit it or not.

In a Pyramid scheme most of the people who earn all the money are at the top. And the many at the bottom end up earning little to nothing.

Take any large corporation.

Don’t they paint the same picture?

The executives at the top get fat salaries and the workers on the shop floor receive meager wages. Worse, should there be difficulties, the managers receive golden parachutes and the workers are simply sent away to find for themselves.

There are also differences however.

While a Pyramid scheme will require you to recruit people into your organization to make money, no traditional company will do that.


As for Ponzi schemes, they revolve around the process of someone asking investors to get in early on a once-in-a-lifetime business venture. The schemer pays old investors with the money they got from new investors. The details of the investment don’t matter too much but you may wonder what suckers people in? It is the promise of fantastic returns on investments.

Some MLMs seem like Ponzi schemes when they have no product to sell but ask you to recruit people into your downline to make money.

However you will agree no traditional company functions even remotely in this way.


Why people accuse MLM of rip-off

If an MLM is a genuine business then why is it so decried by so many people?

The issue is the same as often happens in affiliate marketing.

Thought to be simple, people tend to believe that signing up with an MLM opportunity is some sort of “magic” thing where they will not need to do anything. They will just have to sit on their butt and still make money in just a couple weeks.

When that does not happen they are fast to tell everyone they possibly can find just how much of a rip-off every MLM worldwide is.

The reality is that if they would have just spent as much time actually putting effort in to their MLM organization as they did bashing it afterward, they probably would have made a great deal of money.

Because they do not understand it or they don’t fully give it a chance, these days many individuals have a negative view of multi-level marketing. They just listen to someone they know who says, “MLM does not work” and they swallow it hook, line and sinker.


What can bring you MLM success?

Guess what? …

No service worldwide, MLM or otherwise, “works” or “does not work” … it is the business owner that needs to put in the proper energy, strategy, investment and time required to make it work.

MLM is a business like any other. You have to learn the ropes, apply them and give your business time to mature.


Your due diligence is crucial

With that being stated you do still require to be careful and do your due diligence before joining an MLM business or any other “opportunity” of any kind.

The fact is that there are lots of unscrupulous people out there who are just aiming to make a fast buck off of you by scamming you.

Besides, there are some MLM companies which are founded on principles designed to make you not advance in the business. That is, their founders have a doubtful reputation in the business field and their products are too pricey and not exclusive to distributors (that is, you can find them on amazon, for example). Their business model is complicated or impossible to fulfil. Besides you are required to recruit people into your downline to make money. And the company generally has more cons than pros.

On the other hand, other MLM companies are founded on sound business principles which can make you earn money. That is, their founders have a clean reputation in the business field, and theor products are reasonably priced and on demand in the market. They are exclusive to distributors (that is, you can’t find them anywhere else), and their business model is based on standard binary multi-level marketing. You make commissions from product sales and sales in your downline. The company generally has more cons than pros. They offer plenty of incentives and bonuses and this helps in case you have a leg drop on your downline. There are also other incentives like leadership bonuses, incentive bonuses, and a net pool.

So just remember … if you do have a disappointment … it was probably not just the “Multi-Level Marketing” that was the to blame. Rather it was more than likely that specific company, or lack of effort, or an individual scammer, or something else along those lines. You can be sure that MLM in basic was not the problem!

So keep in mind … MLM is not a plan, it is a very enjoyable dream! A dream that will become a reality if you are willing to pursue it with all your heart.


Summary conclusion

Multi-Level Marketing (MLM) is a very highly discussed topic. One person will state, “MLM didn’t work for me” and the next will state, “I made millions in my MLM service!”

Well, here is the reality behind Multi Level Marketing …

MLM in and of itself is not a scam, rip-off, or anything of the sort. Practically every business has at least some elements or resemblance of an MLM, whether they admit it or not.


Affiliate marketing is the wave of the future and we would like to share our number one recommendation in the affiliate marketing field and we will gladly give you a free tour!


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 A Venture Into the World Of MLM

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 How To Find A Legitimate Mlm Organization Opportunity

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 Lyoness Review

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8 thoughts on “MLM … Pyramid Scheme or Legitimate Business?”

  1. Thanks for sharing this post it was interesting to see hear your take on MLM’s

    Personally I don’t think MLM’s are too bad, however, there are more bad ones out than those who offer potential for you to make money.

    I think your right when you say that people are making money with them, but from what I have seen the percentage of people who are gaining after all the costs they initially have to invest is low.

    You are told to purchase this product, keep to a certain personal volume per month and so on, so if you are new to it you’re going to find it difficult to earn.

    One of the main reasons why people go to affiliate marketing is because while its not get rich quick scheme you don’t need to invest as much money. As long as you can buy a domain you can start, no recurring costs apart from that one 2 figure fee per year which isn’t much in contrast.


    • Hello Josh,

      Thanks to you too for commenting on this post.

      I think the few bad MLMs have given all the good ones bad names. Besides, the few people making money with them does not help matters.

      Yes, the requirement to purchase product, keep to a certain personal volume per month and others make MLMs unattractive.

      I agree with you that affiliate marketing is a better alternative.

  2. Yeah, Multi-level marketing (MLM) has received a bad reputation over the years, but it’s not all negative. Some MLM companies are ok, while others aren’t.

    As you said, it’s not the best way to earn a consistent income. Also, it depends on what kind of MLM company you sign up for. Are the products high-quality? Maybe-maybe not, so this factor is one of many to consider when doing MLM.

    I’ve had experience working with a few MLM companies, and I was disappointed with the experience. They weren’t the best ROI for me, and regret spending the money back then. 

    Just curious- have you had any experience with MLM? If so, was it good or bad?

    Thanks for sharing this review on MLM. I enjoyed reading it.

    • Hi Eric,

      Sure, Multi-level marketing (MLM) more bad than good reputation.

      However, a little care will help you navigate in this troubled space without much problem.

      Like you, many people regret getting into MLM companies.

      I’ve had bad experiences with some companies in the past but I wonder if they were MLM.

  3. You rightly state that MLM is still a touchy subject. Just like with any other business, the good guys are mixed in with the bad and unfortunately, the latter tend to be louder or more aggressive than the former. The former are often too preoccupied with building their businesses and complying with regulatory requirements so as to establish their brand. I think MLM companies ought to prioritize the benefits of the product more than the accolades given to outstanding sales people in order to build more trust in their brands. Thanks for the article.

    We are Blessed.

    • Hi Mark,

      I think MLM will remain a touchy subject so long as the bad nuts remain amongst them. On my part, I think MLM companies should place the priority on the benefits of the product, personal sales, a fair binary business model, incentives for those who work hard, etc. This is how they can win people’s confidence.

  4. I agree with your conclusion that MLM in and of itself isn’t a scam but unfortunately so many have done unethical and illegal things that the reputation is there. In my case, I have spent money and time marketing three MLMs and unfortunately I would say they were net negatives in my past. I did learn some valuable lessons from those experiences but I hope I could have learned those same lessons without the negative experiences. I believe there are some good MLMs, I just haven’t experienced any personally.  

    • Hello Lee,

      Just as we will not condemn the internet because of scams on it, we cannot also not say MLMs are bad because of some unethical and illegal dealings. I’m sorry to hear your experiences marketing three MLMs turned out net negatives. Sure, one always learn from mistakes but don’t consider those experiences as a burden but a springboard. Oh, yes there are a lot of good MLMs. Just check the reviews on our reviews tab and you just might find the right one for you personally.


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