The Difference Between a Pyramid Scheme and Multi-Level Marketing

Lately there has been a big movement of new companies that offer opportunities to people like me and you. I hear from friends, family and people on social media things like:

“Sounds like a pyramid scheme to me!”

“Sounds like a scam!”

“Is this legit bruh!”

“You sure this is not a ponzi scheme?”

With the way of the times now, Multi-level marketing is starting to get very popular because of the wave of social media. It’s now hard to know the difference between a legit multi-level marketing company and a pyramid scheme. I decided to inform you all the difference so that you are not ignorant of the business models.

What is a Pyramid Scheme?

A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public. So basically, you are dealing with a pyramid scheme when the focus is only on recruiting others than selling a product.

What is Multi-Level Marketing?

Multi-level Marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. So when it comes to multi-level marketing (also known as MLM or Network Marketing), the business model is more sales and product driven. Recruiting others only extend the organization and helps to create leverage. Some notable multi-level marketing companies are:

Mary Kay


This is a direct sales MLM that sells cosmetic products. One of the most popular companies out their.




Formerly known as Pre-Paid Legal. This company sells legal plans to protect families and businesses. I’m personally a part of this company. If you are looking for a legal plan or are looking to sell LegalShield, go here.


Empower Network


This is more of an affiliate based model that pays 100% commissions. This company is new to the game and growing fast. This company sells online products such as a blogging system and courses. These products are very powerful to build your business. I’m also a part of this business. You can join me here.


Motor Club of America (MCA)


I do not know much about the business. All I know is that this company sells plans that are similar to AAA. It is cheap to join at a low rate of $40 and $20/month. They pay a whooping $80 per referral! I see a lot of young people on social networks promoting this product. Many seem to be succeeding.


Choosing a company and identifying a pyramid scheme

When choosing a company, it’s great to research the company before joining the company. According to the Federal Trade Commission, they suggest that you follow these steps:

  1. Find—and study—the company’s track record.
  2. Learn about the product
  3. Ask questions
  4. Understand any restrictions
  5. Talk to other distributors (beware of shills)
  6. Consider using a friend or adviser as a neutral sounding board or for a gut check.
  7. Take your time.
  8. Think about whether this plan suits your talents and goals

In closing, let’s not quickly call something a “scam” or a “scheme” when choosing a company. Educate yourself first before labeling a company.

Make it a great day!
jay the analyst and kendra foster

Jay The Analyst

Work With Me – (Click Here)

PS: Learn how to leverage Facebook ads for just $2.95 with Facebook Viral

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