Are Multi-Level Marketing and Network Marketing the same?

Basically, yes. MLM has a bad reputation, so the term is rarely used nowadays. It is a matter of degree. Network marketing companies require their distributors to sell a certain minimum amount of product, as well as recruiting new distributors.

How does MLM work?

One person has a product, he gets ten others to pay him (or her) to sell the product. These ten people each get ten more to sell the product. There has to be a product. Part of the payments from these third level people is passed back to the one person at the base level. These hundred people recruit another ten each. Again the income is shared between the previous levels. 10, 100, 1000, 10,000, 100,000, 1,000,000, 10,000,000, 100,000,000. Well before eight levels of this upside down pyramid have been reached the product will have reached saturation point. BUT, the company keeps on recruiting, keeps on taking payments from would-be distributors to sell this killer product.

Does anyone make money?

The person with the original idea, and the people he or she recruited, but that's it. The money they make comes from everyone who joined later; they all lose money.

What's wrong with MLM?

1. There is no knowledge or control of market saturation.

2. MLMs take your money, to set up a distributorship, and you will lose it.

3. The MLM system destroys people's self-confidence, by knowingly taking their money, building up their hopes, while all the time, the system guarantees failure for most of the people in it.

4. MLM promoters tell lies to get people to join, and mock those who doubt.

5. It is fraud.

Why is MLM still around?

It builds up an individual's hopes of becoming rich for only a small payment. There is a percentage of people who will always be persuaded. MLM presentations are very persuasive, that's how the company makes its money after all. These people are going to be very good at telling lies, maybe they even believe them themselves.