In MLM schemes, there can be hundreds or thousands of members worldwide, but relatively few earn meaningful incomes from their efforts, indicating a possible pyramid scheme.
Multilevel Marketing, or MLM, is a system for selling goods or services through a network of distributors. Multilevel marketing is also referred to as Network Marketing or Direct Sales. While many MLM practices are legal, the FTC has been investigating multi-level marketing companies for decades and has found many with questionable legitimate practices such as running pyramid schemes. Income earned in MLM comes from the commission earned on personal sales, as well as a percentage of the sales earned by other reps recruited by you.
The typical Multilevel Marketing program works through recruitment. You are invited to become a distributor (or contractor or consultant or associate), sometimes through another distributor of the company's products and sometimes through a generally advertised meeting. If you choose to become a distributor with the direct selling company, you'll earn money both through the sales of the MLM's products and through recruiting other distributors, by receiving a portion of the income these distributors generate. And when those distributors recruit distributors of their own, you'll earn money on the income they generate too. The distributors that you sign up with your Multilevel Marketing plan and the ones they sign up in turn are called your downline. The distributor that originally recruited you and whoever is above him or her in the recruitment chain is called your upline. Often the distributor who recruits you will give you some help getting started, including training.