You may have come across invitations to online shop sales, selling almost all kind of stuff from make-up to household goods. Or even offered an opportunity to work from home whereby you make money by selling products and services and recruiting more people into your sales team. All these are part of the multilevel marketing techniques been adopted by companies to boost their sales.

Additionally, the huge consumer market and technological advancements have also contributed to the growth of multilevel marketing opportunity. However, it is important to know the difference between multilevel marketing and the illegal pyramid schemes.

Multilevel marketing vs Ponzi schemes

Basically, multilevel marketing is a marketing strategy used by companies to generate revenue from a non-salaried workforce selling the company’s products. The employees, however, derive earnings from their sales to the public and those made by their recruits in a sales team. This concept of earning based on the sales of one’s team is what contributes to the name pyramid scheme. But before you get into multilevel marketing opportunity, can you differentiate the legit one from a Ponzi scheme.

Illegal pyramid schemes, otherwise known as Ponzi schemes, are fake investment opportunities masquerading as multilevel marketing opportunities. The earnings in most of this illegal pyramid schemes depend entirely on the number of people you recruit and the sales you make to them. The most common Ponzi scheme is whereby you be required to invest your money through a “trusted” individual who promises to double your returns with little risk of loss.  These trusted investors have in way perfected their sales strategy using pushy and enticing words to attract the gullible ones.

Differentiating a multilevel marketing and illegal pyramid schemes

Besides knowing how the multilevel marketing and pyramid schemes work, it is equally important to also understand the products to be sold. This goes a long way into helping one distinguish between the legal and the illegal pyramid schemes. Is it a product you will be excited selling to your family and friends? Will it be bought consistently and for a long period? Most of these Ponzi schemes sell products that neither have a large consumer rate nor can they survive in the market for long.

Before joining any multilevel marketing (MLM) company, it is advised that you do your diligent research to ascertain its legitimacy. You can ask for reviews about the company from friends and other customers. Alternatively, the internet can be of great help when doing your research.

Make sure you understand the terms and agreements of the company before joining the team. This is the perhaps the best way to differentiate the real from the fake MLM companies especially the earning system. As mentioned earlier, if your earnings depend on the number of people you recruit only that’s probably a pyramid scheme.

Multilevel marketing opportunities offer one of the best platforms for companies reach out to the consumers. Moreover, the participants too can earn a living using this powerful marketing tool. All you need is the right team and product to get started.


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