Do you know that Pyramid schemes are illegal and can put you in to a lot of trouble and network marketing or multi-level marketing is a legitimate and legal business model?

Here I'll try to help you to identify the differences between network marketing and pyramid schemes.

Generally, the initial concern for people when introduced to a network marketing opportunity is when they see the compensation plan which resembles a pyramid in shape. Instantly they fear the worst as they draw a resemblance to illegal pyramid schemes. The truth is that this pyramid structure is the same as every other sustainable business model across the world. isnst it simillr to the structer of the government of your country? Your church or other organizations? Are they illegal Pyramid schemes? Is it the shape of the business model that dictates whether a business model is illegal or not? NO, of course not!

Pyramid Scheme (fraudulent money-making scheme)

A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public. When the number of new recruits fails to sustain the payment structure and the scheme collapses with most people losing the money they paid in.

Network Marketing (legitimate and legal business model)

The concept behind that business model is a distribution model that allows a company to sell their products directly to the consumer. Choosing to use a word of mouth approach instead of advertising through traditional streams. Therefore instead of paying the media for advertising, network marketing companies are structured to reward distributors through commission in return for selling their products and finding new customers.

Multi-level marketing companies follow a similar concept to a pyramid scheme, which is a reason for most of the confusion, except that members at any level of a multi-level marketing model can make income through the company’s products and/or services without signing up any new members. members of any level in a multi-level can advance past the people who signed them up.

“I would rather earn 1% of 100 people’s efforts than 100% of my own efforts” 

- John Paul Getty (American Billionaire)

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