Definition: Multilevel marketing (MLM) is a business structure in which products are marketed directly to consumers (which is known as direct selling) by sales representatives (or distributors) whose compensation is based on their own product sales as well as the sales of the distributors whom they recruited to the multilevel marketing company. These recruits are called their downline. MLM sales reps do not receive a salary. Compensation is based on commissions and/or bonusesven; no salary is given.
While many multi-level marketing companies like Mary Kay or Avon are legitimate, MLMs' emphasis on recruitment is similar to how a pyramid scheme works. Multilevel marketing is on this list of typical work-at-home scams because con artists often will pitch a pyramid scheme as a multilevel marketing opportunity. But MLMs that are more focused on recruitment than sales are just another form of pyramid scheme.
Also Known As: MLM, direct sales, network marketing, direct selling, referral marketing pyramid selling
Alternate Spellings: multi-level marketing, multi level marketing
