A lot of people who hear the words “multilevel marketing” run screaming in fear of being scammed, or at least, being part of a scam. This could be due to the negative publicity that mlm marketing has been receiving to date. The notoriety of this business model (which is legitimate, by the way) springs mostly from the few rotten apples (read: pyramid scheme) that have made it into the multilevel marketing barrel.

One thing is certain: the main difference between the two is that mlm marketing is a legitimate business model, while pyramiding scheme IS a scam and IS definitely illegal - not to mention immoral and downright dirty. In layman’s terms, multilevel marketing is a highly social business model that seeks to cut out the middle man and lower the overhead cost, so that the end consumer isn’t paying for the storefront’s operation expenses, including labor, utilities, and even the traditional advertising media. Pyramiding schemes, on the other hand, will want you to invest your money on the possibility of big rewards for small amounts, but is actually just a transfer of money from the “downline” to the “upline” (to be explained later).

Too Good To Be True

If it’s too good to be true, then it’s more than likely that it is a pyramid scam. Just like a wolf in sheep’s clothing, pyramiding schemes mask themselves as legitimate mlm marketing businesses. Pyramiding schemes uses the same techniques and also the same processes in building a network.

The similarities between the two are that you have to sell a product and create a “marketing network” while you’re at it. Then there’s the deal with the “upline” and “downline.” You will either be sponsored by the “upline”, or you get to sponsor a “downline.” The advantage of the “upline” is that they get commissions from the “downline.” The one idea that would lead you to think that you are in a lawful multilevel marketing venture is that getting commissions from your “downline” is just akin to getting bonuses, while most of your profits come from your own hard work.

To Enter the Market

Multilevel marketing is a relatively easy business to get into, sometimes for investments as low as $29, which is in no way saying that it’s an easy business to thrive in. On the plus side of the equation, it is a very flexible business environment. You can stay at home all day in your jammies and still make a decent enough living. Formal education isn’t even necessary, but a bit of techno savvy does help.