Whats a pyramid, and how is it different from a legitimate MLM?
I’ll answer only for the US, since that’s what I’m familiar with. Some other countries, such as the UK, legally define *any* MLM to be a “pyramid sales scheme.” That’s not the case in the US. In the US, a “pyramid”, as usually defined by the FTC and state Attorneys General, is an illegal multi-level scheme wherein people pay an “entrance fee” for the opportunity to recruit others to do the same. Sounds like MLM so far? The primary differentiators between a pyramid and an MLM are: – Product. A legitimate MLM has a legitimate product that would be purchased by customers *even if they were not in the company*. Pyramids have no product (the typical chain letter is a classic example) or a “sham” product. In a pyramid, the pyramid *itself* is the real “product”. – “Headhunting fees.” Pyramids often have large entry fees that drive the bonus structures for the “upline.” The Attorneys General often consider nearly-mandatory inventory purchases (the infamous garages full of product) to be “entr
