why is it illegal?
2007-05-11 05:46:53 · 4 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
It is a deceptive practice that makes promises that will eventually be broken. A lot of people will lose money while a few make a ton off of it. The mathematical model of a pyramid scheme shows that a lot people will have to lose money to keep it going.
MLM is a little different than a pyramid scheme. A lot of the same concepts though. If the MLM is focusing on selling goods or services of some sort and that is where it makes its money, then it is legal. If the purpose of the MLM is to only get people to sign up and put their money in then it is considered a pyramid scheme.
http://en.wikipedia.org/wiki/Pyramid_scheme
2007-05-11 05:52:07 · answer #1 · answered by A.Mercer 7 · 0⤊ 0⤋
There is a difference in multilevel marketing and pyramid selling. In a pyramid scheme only the first people to get in can make any money. Picture a pyramid. It's small on top and large on the bottom. The people that make up the bottom don't make much, if any, money. That is what is illegal. In multilevel marketing you can make as much money as people that got in before you. Yes, your sponsors make a commision on what you sell but you can still make more than they do. Multilevel marketing is not illegal.
2007-05-11 13:33:43 · answer #2 · answered by angela 6 · 1⤊ 0⤋
Multi Level marketing is not illegal. Pyramid selling is.
2007-05-14 12:17:49 · answer #3 · answered by Hockey 6 · 0⤊ 0⤋
its not illegal, but most of those business are scams because they go bank rupt from sellin bad products that noone needs. my company is a multi level business but its been around sence 1972 and is a REAL business. www.learntodreamagain.info
click on "business oppertunity"
email me if you want more information.
when looking at these businesses look at their stock. if they are on the New York stock exchange, they cannot be a scam.
2007-05-11 12:53:45 · answer #4 · answered by Anonymous · 0⤊ 1⤋