Like any other business mlm business also has unscrupulous traders who lay out traps to deprive innocent and good customers of their hard earned money. There is always the apprehension that in your search for a good mlm plan you may walk into a pyramid or Ponzi mlm plan. In such plans the distributors get their commission simply for enrolling people without delivery of any goods or services. Pyramid schemes are illegal in United States and in 2003 a big pyramid scheme scam was unearthed there.
All the 50 states in United States as well as more than one hundred other countries use the mlm plans. Scams however continue to pop up just as in case of the mlm internet scam that was detected and legal action were taken. The bottom line of it is that pyramid schemes are not legal while MLM marketing is and you have to clearly distinguish between the two.
The greatest distinguishing factor is that in multilevel marketing you do not earn any commission simply by recruiting people. It is all about sales and promotions. However the recruited membership could be sold out for commission to other distributors higher in the ladder. When the payments are basically made from out of the money paid by the new recruits you are in for a pyramid scheme that is illegal under all the state as well as the Federal laws in the Untied States.
Beware of the pyramid or Ponzi MLM schemes
