Network, consumer direct or multi-level marketing or direct selling refers to a business approach where individuals receive payment for sales by their recruits into a distribution network. In the US, about 20% of adults have reported direct selling experience, while 55% say that they acquired goods or services through such channels.

However, some have also reported negative experiences, making about 70% of those who tried network marketing decide to leave the industry.

The system allows a marketer to generate higher earnings through his own sales and through a percentage of sales of his recruits, or downlines. The recruiter, or upline, provides new recruits with the needed assistance and training until he can work comfortably and independently.

Some of the more popular and successful MLM or network marketing stories include Avon, Mary Kay Cosmetics, Amway and Tupperware.

One major industry concern is that some so-called pyramid or Ponzi schemes masquerade as MLMs. One way of distinguishing between the real thing and the scam is that MLMs do not entail huge start-up costs, while pyramids ask for a significant investment for new recruits.

Legitimate MLMs also offer to repurchase unsold product or inventory for as much as 80% of a distributor's payment. An MLM will also consistently refer to a target market for its product or service, while a pyramid will focus only on pushing a product or service without any clear consumer preference.

A potential marketer should also be wary if a program focuses more on recruiting than selling; intense recruitment effort could be a sign that the scheme aims to make a quick profit on unsuspecting individuals, especially if one is offered commissions for each new member he adds to the network.

Ethically, the MLM should focus on building downlines by seeking individuals first as customers instead of promoting the income potential of the business. Once the individual accepts or believes in the product, the company will no longer need any hard-sell for recruitment.

Interviews with consumers who have experience with the company and its offerings and securing a Better Business Bureau profile of the MLM will also help establish if the business is a legitimate one.

Before joining an MLM, one should be decided on selling the company's product or service and have reasonable expectations from the business, particularly in terms of earnings.

Ideally, an individual should have access to his upline's status, including his earnings from the venture, background, and training support.

The new marketer should also ensure that he profits from his effort and investment into the MLM within weeks of joining the networkm particularly if demand for the product or service is strong. Pyramid schemes often preach patience and say that earnings will come only after months or even years of work.

It would also help a recruit to establish how much marketing or advertising support the MLM is giving for the product. The new marketer should decide if he is keen to joining a company that exerts much effort into promoting the product through traditional advertising and new media such as the internet, or if he prefers a network with a more restrained approach.

The beauty of MLMs is that it offers low entry costs and high revenue potential, with evidence that such investment and profits are possible. However, these same qualities have made network marketing attractive to unqualified individuals with poor backgrounds from previous employment or businesses, have limited capital and unrealistic expectations.

Although more of the exception than the rule, these are the types of individuals who tend to destroy the reputation of legitimate distribution networks. MLMs run by such characters often oversell the business, place excessive emphasis on recruitment and unfortunately, offer inaccurate or misleading information on the venture.

Legitimate network marketers take time to work on their business fundamentals and are not content resting on current success. These companies are also open to learning and adopting new marketing or sales approaches, networking strategies and other ideas for further business development.

In a sense, MLMs are knowledge-driven. This view recognizes the fact that in the so-called new economy, people and money are knowledge - extending the reasoning, this means that one enhances his chance of success the more people he has on the network.