What is Multi-level marketing (MLM)? Criticism & Evaluation

Multi-level marketing (MLM) is a business model in which companies sell their products or services directly to consumers, through a network of independent distributors. The distributors earn income from the sale of products and also from network of distributors. This creates a hierarchical structure, where each distributor earns a commission on the sales made by their product or services.

MLMs are sometimes criticized for their potential to encourage pyramid schemes, where early participants make money primarily by recruiting others, rather than selling products. Some MLMs have been accused of being pyramid schemes in disguise, while others have been sued for making false or misleading income claims to their participants.

It is important to thoroughly research an MLM before joining, to ensure it is a legitimate business opportunity and not a pyramid scheme. Key factors to consider include the company’s product line, the compensation plan, the experience and reputation of the company and its leadership, and the company’s legal and financial standing.