MLM vs. Pryamid

One of the most common words I hear in association with network marketing is "pyramid scheme." Network marketing and the classic pyramid scheme are 2 very different things.

A pyramid scheme is a business model and a legal term. It involves the exchange of money for enrolling into the scheme, usually withno exchange of services or goods. Pyramids are also illegal in most countries and are watched closely. Most of these are scams. Most people that get caught in these scams never get their investment back. For more on this you can visit Wikipedia's article on pyramid sheme's.

Multi-Level Marketing is also a business model that involves direct marketing and the principles of franchising. Once involved with a network marketing company, you are compensated for marketing your products and your business opportunity. There have been some major court rulings on the legality of network marketing to ensure that it is not a scam. One of the ways to make sure it is legal is to make sure you will have to sell the companies products and not just recruit people.