Thread: difference between pyramid scheme and mlm

I am always confused between the difference between pyramid scheme and mlm and always tend to misinterpret both. I want to know the basic difference between both and any advantages and disadvantages of using both type of programs.

You'll probably lose with either one.

Originally Posted by arvie

You'll probably lose with either one.

Haha, best post so far ^^,
Yea, I wonder about this myself. I have never managed to figure out the difference =/

i think whether mlm or pyramid that's not important,

i'm not sure pyramid and mlm has got any different. Talking both, they depends on the founder how they work out the working plan and passive return,

in current trend, most program are running in 'binary plan' and offer passive return,

binary plan means u need to have at least 2 team or 2 downline to earn first commission, this case, the strong team will help the weak team,

passive return: eventhough u didnt able to sell a thing or recruit a downline, u still get certain percent of cash money return from the program.

just to share what i know

Pyramid scheme is an illegal scheme which is made to rip off the lower level -members and make the owners rich. Mlm-programs are programs where everyone gets the same amount for a referred member. That's what I think the difference is.

But the first explanation is better. =P

As far as I know a pyramid scheme is illegal in many countries. In pyramid schemes the members that first joined earn most of the money because of the way it works and the people who join last would earn almost nothing, besides losing their money they paid for the membership of the scheme.

And coming to MLM, it is a legal pyramid scheme. Most of the MLM's we see today were born from pyramid schemes. These MLM's work in a way that doesn't break the rules of laws. Unlike pyramid scheme, in MLM's a person who joined in the middle of the scheme can earn more than the person who joined right at the top, provided he builds his down line structure in a way that gives him the best scope to earn maximum offered by the system that the MLM follows. Example for this is Binary system.

And if there is no down line under you neither the pyramid scheme nor the MLM can help you in any way to make money from it.

Good question,

Pretty simple, yet most don't have a clue, so illegal pyramids and HYIP's just keep on coming and going. Easiest way to determine if a program is pyramid, just look at the product or service, then ask yourself, would I purchase this product without the income opportunity. If you cannot say yes, forget it, it will be defined as an illegal pyramid by regulators no matter what hype says product is worth the price.

Always look for a product or service with value, and then it makes no difference how it is marketed, MLM, direct sales or traditional sales, if a product has consumers purchasing it without being distributors in it for the money only, then it is a good chance you found a legal company. If all companies were put to this acid test, if you cannot prove at least 50% or more retail consumer sales, forget it, they can bring any company down.

Good luck to all, Mike