MLM Blog
Is MLM Legal?
Multi-Level Marketing (MLM) is legal in many countries, but its legality depends on the structure and focus of the business. For an MLM to be legal, the primary focus must be on selling legitimate products or services rather than on recruitment. When the emphasis is solely on recruiting new members to make money, it starts to resemble a pyramid scheme, which is illegal in most jurisdictions. The difference between an MLM and a pyramid scheme is crucial. In a legal MLM, members earn income mainly through product sales, while recruitment commissions play a secondary role. In contrast, pyramid schemes rely on constant recruitment to pay participants, with little or no actual product sales, making them unsustainable and illegal. Regulators like the Federal Trade Commission (FTC) in the U.S. monitor MLMs to ensure they comply with laws that protect consumers from fraud. Therefore, it's essential to research any MLM thoroughly before joining.
