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.
Something multi-level marketing as well as network marketing companies are poised to capitalize on. As a result, the industry could soon experience larger than life growth, spurred by baby boomers looking to adjust their retirement feelings and plans. Whether you're interested in starting your own business for retirement income or helping others explore this entrepreneurial path, download our free guide: How To Start a Business For Retirement Income here
“The average direct seller makes about $13,000 a year,” says Amy Robinson, director of communications and media relations for the DSA. “The median income is about $2,400 a year. Now that’s an important distinction, because the average is skewed by the people who are making a lot of money compared to the people who are in it as a hobby. So when you look at the median—which of course means 50% make more, 50% make less—you’re only looking at about $2,400 a year.”
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Direct selling does not necessarily incorporate the endless chain of recruiting that makes MLM so controversial, and is not necessarily unethical. However, the modern direct selling industry is utterly dominated by MLMs. According to the Deceptive Direct Selling Association (DSA), the industry's trade association and lobbying arm, 97% of its members are MLMs as of 2017. The distinction between direct selling and network marketing, which many MLMs hide behind to maintain their legitimacy, is therefore essentially meaningless.
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