What is a pyramid scheme/

What is a pyramid scheme? A money making system that creates income from getting people involved in the business and not selling a real product or service. Unfortunately for MLM businesses that means many of them. The Government declared quite a few years ago that the difference between a pyramid scheme and a legitimate MLM is based on the product and how people are sold.

If people are sold a real product or service with the ability of making money off of reselling it as a benefit, it is a legal MLM program. If people are recruited into the business with hopes of making a lot of money off of getting other people involved, while selling a poor product, that is a pyramid scheme or illegal MLM.

Some of the really bad pyramid schemes even go one step further. They don't even have a real product or service at all. Getting people signed up is all they do. Oh, of course most of them will claim that they are not a pyramid scheme but that is, of course, not true. It's all about the product.
with inputs from:Mazu