Pyramid Scheme VS. MLM

If you’re in any network marketing company, then you’ve probably had a family member, friend, or even a prospect think you’re trying to get them involved with a “Pyramid Scheme”.


I was explaining my primary company to someone the other day, and they replied back to me “Oh, yea you’re in a Christmas tree scheme” And my first reaction was “really, Christmas tree?” otherwise popularly known as “pyramid scheme”, those dreaded words that any true network marketer never wants to hear!

So today, I figured I would give you the difference between a true legal MLM company and a fake, scamming, “pyramid scheme”. The definition of a pyramid scheme is a “non-sustainable business that involves the exchange of money without having any true products or services to sell.” (curiosity of wiki)

Let me highlight the warning signs of a fake business here:

  • In the pyramid the only people who can make money are those at the top; since there are no products or services to sell there is NO way someone at the bottom can make any money.
  • The way those people at the top are making money is by recruiting new members into the “business” and charging them a fee.
  • Fake businesses will usually promise you high commissions in a very short period of time by telling you all you have to do is recruit people into the “business”
  • If the company does NOT answer all of your questions BEFORE you sign-up, take caution! Any true legal company will answer all questions, give you full details of the company and provide you with descriptions of the products and services offered that you would be selling.
  • If the company does NOT have any products or services to sell, then that is considered a pyramid scheme.
  • If most or all of the possible income is made ONLY by signing up new members-pyramid scheme!
  • Lastly if the company is always reassuring their members or potential new recruits that they are legit-you guessed it-PYRAMID SCHEME!

Now you know the warning signs of the fake “business”, let’s now highlight the traits of a true legal MLM company here:

  • Any member at any level can make money by selling the products or services of the company WITHOUT having to sign-up new members.
  • Any member at any level can make MORE money than the person who signed them up, or commonly known as a “sponsor”, in the network marketing world.
  • The company will explain everything about the company, products, services and answer all of your questions BEFORE you sign up.
  • Real MLM’s have little or no enrollment fee.
  • The main source of income is from the products or services being sold by the “distributors”
  • And finally your income depends on YOUR effort and time that you put into it. If you work just a little bit, then your income will reflect that, but on the other hand, if you are putting a massive amount of time and effort into it, then your income will reflect that as well.

Now that you know the difference between true MLM companies and the dreaded “Pyramid Schemes”, I hope you can decide whether the company you are thinking about joining (or perhaps are already in) is the one for you.

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If you are already in network marketing and are struggling to build your down-line, and you’d like in depth training, click here to see the information where my education began.

P.S. If you’re considering an MLM and would like to know what I’m doing, head over to this blog to check it out.

All the best,

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-Marie 🙂

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