Great business opportunities abound across the internet, but they are swamped by the massive number of scams that exist. In order to make any money from these businesses, one must know how to separate one from the other. Ads for MLM, network marketing, and cash gifting get seen by almost anyone looking to make money online. But what are they, and what are their differences?

MLM stands for Multi-level marketing, and is also known as Network Marketing. In this business model a company markets its products directly to consumers through sales associates. These associates do not receive salaries, but are paid based on the amount of money they bring in through sales. In some such companies sales associates may also recruit new associates, and may make additional money for referring these new associates to the company, or may even earn a bonus based on how much the new associates make in sales.

This may sound confusing, so lets use an example to think about this business model. Some cosmetics companies make money by hiring associates to sell cosmetics directly to customers. The associates have to pay some start-up costs for supplies and training, but they are expected to be able to recoup these costs once they start earning a fraction on the sales they make.

By charging these initial fees, the company guarantees that it will not lose money on sales associates who sign up, receive their materials and training, and then just walk away. Unfortunately, some companies charge very high fees, making it difficult for the new recruit to earn it all back, let alone make a reasonable profit off the arrangement.

Occasionally, associates are expected to get most of their income from newly recruited associates. Often, the new recruits pay their fees directly to the associate who recruited them. This necessitates high fees, since every individual is primarily making money off those fees. It also usually requires a constant supply of new recruits. All-in-all, one must be careful of such businesses.

Cash gifting businesses have this structure. For instance, say the first associate pays $100 to join the organization. They then earn $100 for every additional person they bring in to the business. This is entirely legal, as each transaction is merely one individual giving another one a cash gift, hence the name. However, this structure will eventually collapse, since each associate needs several people to join under him or her to make it worthwhile, and each of those recruits as well, etc.

When you are looking into MLM and network marketing opportunities, it is therefore very important to know in advance what fees you will be paying and whether you can reasonably expect to make enough money to cover these fees and make still make the level of profit you are interested in. So how do I determine if there are differences in cash gifting, MLM, and network marketing? While these terms all describe similar business models, the critical difference between a good operation and a bad one usually has to do with their fee structure.

Beware of groups or companies which charge astronomical fees and encourage recruitment over, or to the exclusion of, actual sales. Sound, decent, and trustworthy businesses do organize themselves as MLM or network marketing businesses. Thus, to take them apart, there is one simple thing to examine: their fees!