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MLM vs Pyramid Schemes: Key Differences
In the realm of direct selling, MLM and pyramid schemes are often juxtaposed but possess distinct characteristics. MLM, or Multi-Level Marketing, involves a structured approach where distributors earn through product sales and recruitment. Commissions are garnered not only from personal sales but also from the sales of recruits within their network. Legitimate MLMs emphasize genuine products or services. Conversely, pyramid schemes prioritize recruitment over product sales, often lacking tangible offerings. These schemes, illegal in many jurisdictions, rely on a continuous influx of participants to sustain the scheme, leading to eventual collapse. While MLM offers opportunities for legitimate income through product distribution and network building, pyramid schemes exploit participants with false promises of quick wealth, ultimately resulting in financial loss for most involved.