MLM is not a pyramid scheme. In fact in Australia Pyramid selling is illegal. Sometimes the differences between the two are hard to see. The ACCC helps consumers to figure out the difference with just 2 x questions:
- Are the rewards for participants in the scheme purely based on product sales (by either themselves or others they introduce to the scheme)?
- Are the products genuine products of real value, and of a type that normally will be used and purchased time and time again by a consumer, and not at a grossly inflated price?
If you answer yes to both of these questions than it is most likely a legitimate Multi-Level-Marketing scheme. Pyramids rarely include the regular retailing of products. Instead they provide rewards for introducing new participants.
Legitimate marketing schemes only provide rewards on genuine product sales.
Options that pose as MLM include:
Investment seminars and real estate scams: High pressure sales in high-risk investment strategies. Profits are through attendance fees and by selling property and investments at inflated prices.
Business opportunity scams:
There are a range of scams marketed as business opportunities. They promise success but usually only the promoter makes any money.
Guaranteed employment / income scams:
“Guarantee” you a job or certain level of income, tricking you into paying an up-front fee for a “business plan” and/or materials.
Work from home scams:
Employment opportunities that promise you huge incomes with very little work, usually by asking you to transfer money for someone else or recruit new victims.