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Pyramid schemes are illegal. Are MLMs?

We all know pyramid schemes are illegal. Are Multilevel Marketing programs illegal? They could be if they were really pyramid programs, but legal Multilevel Marketing programs have some distinct characteristics and rules.

  1. Is the reward for recruiting new Affiliates greater than it is for selling to the public?
    Yes = pyramid — No = legal MLM
  2. Do Affiliates sell more to other Affiliates than to the public?
    Yes = pyramid — No = legal MLM
  3. Is your income based on the number of people you recruit?
    Yes = pyramid, if you earn on what Affiliates pay to join —  No = legal MLM, if your income is based on sales to customers
  4. Are you forced (strongly encouraged) to buy things you don’t need to stay in good standing?
    Yes = pyramid — No = legal MLM

A strong and stable MLM program provides great income opportunity.

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