Chances are if you have been around in the network marketing or direct sales industry awhile then you have been asked this question…


Is this a Pyramid Scheme or one of those illegal Pyramid things?”

People have heard this for years and don’t even understand the true meaning of a pyramid structure. Some have called the pyramids of Egypt the strongest structures known to man. pyramidsOk, I am being sarcastic.

Actually I am referring to a common objection uneducated people make about direct sales and the network marketing industry.

Most people do NOT understand the differences between a Ponzi Scheme, a Pyramid Scheme and a Legitimate Direct Sales company like Amway that use the network marketing business model.

First check out this video.


Let me be very clear in what the difference is between a company with a hierarchy and a pyramid scheme. In the first, the number of people employed depend on the amount of money available to pay them.

If one has studied (business) organizational management, the people at the bottom of any organization in the workforce are the least paid.


Think about it!

Now according to the Federal Trade Commission (FTC),

quoteAn illegal pyramid is when distributors are signing people up and not exchanging a valuable product or service.”

The compensation structure of a network marketing company does not mean it is illegal.

More Pyramid Scheme Info

Here is a very good article by Tim Sales that gives The First Historical Example Of A Pyramid Scheme…

After you read it you may still ask, Is Network Marketing a Scam Like a Ponzi Scheme? Well if you read this article by Tim Sales it will also open your eyes.

need-more-repsFinally, I leave you with what the U.S. Securities and Exchange Commission Frequently Asked Questions about Ponzi and Pyramid Schemes. They have a chart that even shows the differences.

Now you should definitely know and understand the fundamental differences between a legitimate network marketing business and a Ponzi scheme and Pyramid scheme.

Since you now know it is legal, is there any other reason that would prevent you from starting your own business today in network marketing or the direct sales industry?

I hope you have this article has been beneficial to you. If so please share it and leave some comments below.

BOTTOMLINE: A Pyramid Scheme And/Or A Ponzi Scheme = ILLEGAL

However, network marketing is a legitimate business model.

To Your Success!
charles lenoir

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Feel free to comment below!