1. Multi-level marketing is a marketing structure which recruiting salespeople, or distributors, to sell products and find new recruits as their downline. Distributors sell popular products and recruit other distributors to join them. The revenue is not only from the sales they personally generate, but also from the sales of their downlines. Multi-level marketing is a legitimate form of business. 2. A pyramid scheme is a non-sustainable business which generates revenue only from enrolling other people into the scheme, with no real products and service being provided. Only the top levels of the pyramid make significant amounts of money, and most of the bottom of the pyramid end up with a loss. If the originator recruits 8 distributors, and each of them, in turn, recruited 8 others, just after 9 levels come up, the bottom of the pyramid needs 134,217,728 persons to be recruited. The originator and top levels are not winners of the game too, because pyramid scheme is illegal in USA and other countries. 3. How to distinguish a legal MLM with a illegal one? If the revenues are generated not from purchases of valuable goods and services, but just simply from the purchase of the right to participated in the money-making venture, that is a pyramid scheme.
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