How Does MLM Work

A long time friend that you lost touch with for the last 10 years gives you a call and asks to meet up. After meeting up and breaking the ice, he/she then introduces a new revolutionary product and how you stand to get rich by selling it. Throw in jargons like passive income and downlines, you suddenly realise you’re beginning to be sucked into the dream they are selling. Sounds familiar? But is MLM/Network Marketing a really bad? Is this practice legit or is a scam? In this article, we will discuss and answer these questions.

MLM itself is a legitimate business strategy. However the subject of ethics can be rather vulnerable. The pyramid scheme, unlike MLM, is clearly a scam. In a pyramid structure, a member pays a fee to join. A portion of the money will then be remitted back to them when they bring a new member into the scheme. No products are involved in this scheme, simply get more people to dump in money for your chance to make more money. There are clear differences between the pyramid scheme and the MLM scheme. Because generating income in a pyramid scheme comes at the expense of another person, a win-win situation will never be possible. In MLM however, the sales of products can generate true revenue thus creating a sustainable ecosystem for both themselves and their downlines.