What is Mult-Level Marketing ?
A toy company convinces you to sell some of their toys to your friends and classmates. You get some compensation for the amount of toys you sell. Then they toy company tells you that if you can recruit your friends to sell toys too, you will get some compensation for all of the toys they sell too. And your friends can get more compensation for recruiting their friends. Which you also get compensated for for recruiting your friends. And so on, and so forth.
You can see how this starts to look like a pyramid scheme where you get paid just for recruiting more people and those people recruit more people. And basically in all common sense of the term, multi-level marketing is just a re-branded pyramid scheme. However, the companies get away with it (pyramid schemes are very illegal) because there is a requirement of actually selling some units of whatever the product is. If you don’t ever sell anything, you don’t ever get paid.
The big problem with multi-level marketing is there is usually a high cost of entry. You are usually required to pay entry fees, purchase “training materials”, pay to go to “training seminars”. A lot have research as been done and conclude that 99.6% of participants lose money.
MLM is a scam that’s just barely in the realm of legal. They are the modern form of a pyramid scheme.
The reason you can’t get a straight answer about it being a pyramid scheme is because it’s not technically a pyramid scheme. They also don’t want to scare you off. A legitimate business would be able to flat-out tell you it was legit & not have to make excuses.
It’s also naturally destructive to your relationships. Because you’re meant to recruit people to work underneath you, EVERYBODY YOU KNOW BECOMES A TARGET. This is unavoidable – especially if you believe in the product/service the MLM provides, like religion, you think you’re doing people a favor by offering them a great opportunity.
The reality is that most people feel ill about MLMs, but even more so; people do not like to be solicited… especially by someone they’re close to. By approaching people, it just cheapens the relationship.