network marketing

Multi-level marketing (MLM), also known as network marketing, is a business model where sales are made through individual distributors and their social networks rather than traditional retail outlets. Distributors earn commissions not only from their direct sales but also from the sales of individuals they recruit, and from subsequent recruits down the line.12

While some MLMs are legitimate, the practice is often associated with controversy due to fraudulent models known as pyramid schemes. Pyramid schemes primarily profit from recruiting new members rather than product sales, and they inevitably fail when recruitment slows, often leaving participants in debt. Legitimate MLMs typically have a buy-back policy for unsold products and avoid substantial start-up costs.1