MLM and Pyramid Schemes Can Be Very Similar

Considering an MLM opportunity? Be careful. It may well be a legitimate MLM business. Or it may be a pyramid scheme.
MLM (multilevel marketing) is an attractive business proposition to many people. MLM offers the opportunity to become involved in a system for distributing products to consumers. Unlike the person starting a business from scratch, the MLM participant has the support of a MLM company that supplies the products and sometimes offers training as well.
As an MLM participant, you make your money by selling the MLM products to other MLM participants. If they're not already a member of your MLM company, you sign them up. Besides earning money off your own sales, you also earn a percentage of the income generated by the distributors that you've brought into the MLM plan (your downline).
Often there are bonuses for selling particular amounts of MLM product or signing up a certain number of new members.
Sounds good, doesn't it? And being part of a well-run MLM business can be a lot like being a member of a large extended family.
Unfortunately,not every MLM opportunity is a legitimate business opportunity. Many pyramid schemes, frauds designed to part the unwary from their money, are disguised as MLM opportunities.
Like MLM, pyramid schemes depend on recruiting people to become distributors of a product or service. Like MLM, the pyramid scheme offers the opportunity to make money by signing up more recruits and by accomplishing certain levels of achievement.
The big difference between MLM and pyramid schemes is that MLM is legal in Canada and pyramid schemes aren't. (Participating in a pyramid scheme is an offence under the Criminal Code of Canada, punishable by up to 5 years imprisonment.) But it can be very difficult for the person looking for a business opportunity to tell the difference between a legitimate MLM opportunity and a pyramid scheme at a glance. How do you tell whether it's a legitimate business opportunity or a scam?