Do you know the difference between Multilevel marketing and Pyramid Scheme? If "no" then this article is for you. And If yes, you can also read MLM vs Pyramid schemes and detect pyramid schemes in multi-level marketing to be on the safe side after knowing the difference between MLM and pyramid scheme.
So, In this article, I will be sharing Multi-level marketing vs Pyramid schemes basically differences in MLM and pyramid scheme models.
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| difference between multilevel marketing mlm vs pyramid scheme |
Multilevel marketing is a very growing business and many users are earning well. Still, many more users are also losing their money just because they are not able to detect multi-level marketing pyramid schemes.
Important to know Top 10 Direct selling companies in India 2022
Is network marketing a pyramid scheme?
In Multi-level marketing, there are two types of company legitimate business model which are legal and pyramid scheme based model which is illegal.
Nowadays, people don't believe and don't want to work in MLM because some companies use pyramid schemes based on earning.
We must know that
"Every MLM Company is not illegal or fraud but MLM using pyramid schemes are illegal"
It is important to know MLM vs pyramid scheme and the major key difference between MLM and pyramid scheme company.
To know more about it you can read the complete detailed article - Pyramid Schemes are illegal and a List of countries where pyramid schemes are illegal.
Work of Multi-level Marketing ( MLM ) Company
Multi-level marketing is a network or group of people who are encouraged to sell company products and increase sales of the company. The company and its distributor earn money from the sales of products.
Distribute can add more distributer in his network, so he can get commission on team sales of products. More teams more commission by sales.
Company products are directly sold to customers in retail who was not involved in your MLM company.
If the company is working on the above-based simple and effective model then a great company is safe.
Now, let us check how MLM company is using pyramid schemes.
Multilevel Marketing vs. Pyramid Scheme
A pyramid Scheme or Multi-Level Marketing is confusing for many people it is important to know the difference between MLM and Pyramid scheme-based companies.
To understand easily I have used to describe in MLM vs Pyramid Scheme in table format. So Please also this article with your members and friends.
Difference between MLM and pyramid scheme
| Points | MLM | Pyramid Scheme |
|---|---|---|
| Members Earning | Selling company products by commission-based earning | Add new distributer by investing and get a direct commission from new recruitment. |
| Motive | Sale more products for the commission at the multilevel distributer team. | Add more distributer to earn from it. The product is just for reference but not involved in earning. |
| Commission and Fees | Low money to pay in order to become a distributor and earn majorly from selling products by the whole team. | For Enrollment in the company high fees is taken to share direct referral commission. |
| Is Legal | Multi-level marketing is Legal | MLM pyramid scheme is illegal in many countries |
| Products | MLM is usually having many real products. | There is no product except a fake product and investment to become a distributor. |
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Is multi-level marketing the same as a pyramid scheme?
All Multi-level marketing is not a pyramid scheme-based company. Add more distributer rather than selling products and earning from it then that MLM is a pyramid scheme based which is illegal.
Above mentioned all points about MLM Multilevel marketing vs pyramid schemes will help you to understand that all MLM is not fraud until they use pyramid schemes.
You can look your company among top network marketing companies in India
For more information in detail, you can visit Wikipedia.