Multi-Level Marketing (MLM)

A business model in which independent distributors sell products and recruit other participants, earning commissions both from their own sales and from the sales of their network. It is also referred to as network marketing or direct selling. MLM can be a legitimate business model, where companies primarily focus on selling products to real consumers, maintain reasonable startup costs, and provide transparent information about potential earnings. More questionable MLM practices emphasize recruiting new participants rather than actual sales and often require significant purchases to maintain an “active” status. In such schemes, the vast majority of participants earn very little, and some even incur losses after deducting expenses.