Is MLM The Same As A Pyramid Scheme?

is mlm the same as a pyramid schemeIt’s a well-known fact that the MLM industry has a lot of skeptics and a lot of them will introduce the debate and ask the question: is MLM the same as a Pyramid Scheme?

Now, people ask this all the time within when looking at the industry.

Quite rightly so, it’s a question that comes up because MLM and Network Marketing are both in a similar shape to a pyramid.

But as I’m going to explain in this post, you can actually look at lots of aspects of society and also see similar pyramid shapes.

So, let’s just tackle this question properly.

So, seriously, Is MLM The Same As A Pyramid Scheme?

Let’s tackle the question by looking at another aspect of society.

Let’s look at a job, for example.

Within a job, you have the owner of the company, then you have the chairman, the CEO and
the board.

Then below that, you get the management team.

Then below that you get the supervisors, and below that, you get the kind of workforce that produces the products or service that the business provides.

And as we can visualize from the image below, this is very much in the shape of a pyramid.

pyramid scheme mlm

You’ve got the person at the top making the most money because they started
the company.

You’ve got the CEO making quite a bit of money, and you’ve got the new apprentice who maybe starts on work experience; who could be earning absolutely nothing.

They might be working as a free apprentice or on some kind of work experience.

As you can see, it’s a situation in which people can actually join and legally not be earning

There’s also a lot of the workforce, who could be factory workers (for example) of an organization in which earn a minimum wage (a small amount of money).

So as we have explored, it’s shaped like a pyramid, in a similar way to how network marketing is.

Let’s also take another example about society in general.

I’m sure you’ve seen within your city. There’s plenty of people who are homeless and who haven’t had perhaps the greatest opportunities in life.

Or maybe there’s certain circumstances for them to be that way, to be homeless.

Now, quite clearly they’ve gone on a different path at some point in time; they’re at the bottom of the pyramid of life due to some circumstances (which are either part of their own control, or not).

And there are people who are not homeless, but not as rich as someone else in society.

And then you get some people who’ve got more money than that.

Some people who’ve got better jobs than other people.

Some people who have had a better education then other people.

If you really look at other aspects of society there are always lots of people who are better off than other people.

And there’s always someone either above or below you.

So you can see lots of aspects of society are shaped like a pyramid but we wouldn’t dare call them a pyramid scam.

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How To Avoid A Pyramid Scheme?

Let’s get back to the question in general.

Is MLM the same as a Pyramid Scheme?

I’ll give the short answer which is no.

A Pyramid Scheme is illegal, and it takes place when there is no actual product being sold.

And people are only compensated for bringing in new distributors, recruits, or new members of that particular scheme.

With Network Marketing and MLM there are very clearly defined products and distributors can make “retail” money from selling those products.

On the back of this, there is a business opportunity as well.

So there’s two different ways that people can make money.

Now, where it can boarder on a Pyramid Scheme is when you have some companies that are setup who not have a clearly defined product.

In those kinds of situations, it could be classed as a Pyramid Scheme.

But with MLM and Network Marketing done right, it is absolutely not a Pyramid Scheme.

It is a valid business opportunity.

The fact that it’s shaped like a pyramid is not a problem at all, because as I’ve already explained to you, most aspects of society are shaped like a pyramid.

how to avoid a pyramid schemeI hope this post explains the thorny issue of what pyramid schemes actually are, and how they are completely different from a genuine business opportunity.

It can be difficult to identify genuine business opportunities, but look closely and you will be able to identify the characteristics.

Are you in a genuine business opportunity? If so, what do you say when people say “it’s a pyramid scheme”?

Let me know in the comments section below.

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