Difference Between MLM and Pyramid Schemes
Multi-level marketing(MLM) is networking marketing where individuals sell products of a company through referrals and both the sellers and the company benefit from the practice as the company gets more sales and the individuals who participate in the network marketing also earn a considerable income in the process. Pyramid schemes are basically operations that are disguised as MLMs but then they are only there for making the people at the top of the structures profitable at the cost of those at the bottom of the structures.
No Real Product
This is the outstanding difference between the two. Proper MLMs always have a proper good that is there whereas pyramid schemes do not have anything valuable that is involved. In pyramid schemes, the main goal of those at the top is to sell those who are at the bottom ideas and build castles in the air for them. This is the main urge for new investors to invest in these tools used by scammers. For MLMs on the other hand, the focus is more on a real product that is being sold which could be a skincare routine or anything else.
No Big Company Backing
Pyramid schemes do not have big companies that are behind them in all the cases that I have come across. This is because they are always created by scammers with the goal of taking hard-earned money from the public and leaving them with nothing to show for it. No reputable company is willing to risk its good name by associating with a pyramid scheme. However, for MLMS, a couple of firms from time to time set up MLM platforms in order to market their products and it does pay off most of the time as they end up with a large pool of marketers.