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According to wikipedia Multi-level marketing (MLM), is a marketing strategy that compensates promoters of direct selling companies not only for product sales they personally generate, but also for the sales of others they introduced to the company. The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing. Distributors earn a commission based on the sales efforts of their organization, which includes their independent sale efforts as well as the leveraged sales efforts of their downline. This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager. Commissions are paid to multi-level marketing distributors according to the company’s compensation plan. There can be multiple levels of people receiving royalties from one person’s sales.

Once upon a time, multi-level marketing was a legitimate business which provided a way for small companies to get their unique products to consumers in small towns and rural areas which had no access to these products. MLM can no longer claim to be new and, thus, exempt from the normal rules of the market and the way goods and services are sold. They have been tried and, for the most part, have failed.

Today, there is simply no real need for distribution “systems” as there once was, and indeed the focus of all the programs is not on the products they sell — which are usually either bogus or are available somewhere else to the public at the same or lesser prices. Instead, the focus now is solely on recruiting new people to either buy into the program or else to buy products that are grossly overpriced (i.e., a $1 bottle of “herbal shampoo” for $26), with the idea that those people will recruit additional people who will also buy into the program or themselves buy the grossly overpriced products.

In today’s internet economy, there is simply no need for multi-level marketing or the overpriced products that they sell — meaning that the only thing they are selling are memberships in anticipation that future memberships will be sold in the future, which is the classic definition of a pyramid scheme, and thus securities fraud.

Because products are available over the internet to everybody at lower costs than ever before, claims that “Multi-Level Marketing will take over the World!” are completely bogus. Indeed, the fact that no MLM schemes sell significant product to anybody other than the people who bought into the programs is proof positive that MLM is a dinosaur in today’s economy, and exists only by defrauding people to buy memberships in anticipation of being able to make a profit defrauding other people into the program.