MLM, also known as direct marketing or network marketing, is a method of selling items directly to customers through independent sales agents.

MLM companies frequently entice new recruits by promising them income and freedom. These becomes infamous for their controversial business practices

What Is Multi-Level Marketing?

Multi-level marketing organisations offer their products to customers through people rather than through retail outlets.

Distributors are not employees of the company in the MLM model. Instead, they're small-business owners that build their own distribution networks to assist them in selling their goods.

To earn revenue, multi-level marketing companies rely on this extensive network of independent distributors.

Pyramid Scheme vs. MLM

It's fair if the MLM business model makes you wonder if they're nothing more than pyramid schemes.

So, what distinguishes one from the other as a legal ruse? It all comes down to the compensation plan's focus on sales versus recruitment.

"If an MLM is not a pyramid scheme," the Federal Trade Commission (FTC) states, "it will pay you based on your sales to retail customers, without needing to recruit new distributors."

Pyramid schemes, rely on the ongoing recruitment of dues-paying members to stay afloat, even if this means members must continue to buy things they may not be able to sell.

MLMs and the 70% Rule

To be compliant, an MLM must follow the 70 percent rule, which states that "at least 70% of all products supplied must be acquired by non-distributors."

Should You Join An MLM?

According to the Consumer Awareness Institute, 99 percent of people who participate in MLMs lose money.

As they struggle to resell products and recruit members for network marketing schemes that frequently walk the fine line between legal and illegal.

Moreover, participants are kept in the dark about the true costs of participation.

MLM Companies

1. Amway 2. Avon 3. Herbalife 4. Perfect 5. Tupperware 6. Oriflame 7. Young Living 8. USANA 9. Pola 10. Sun Hope