What is MLM?
Multi-level marketing — selling products through a network of distributors who also recruit.
An MLM (multi-level marketing) company sells products through independent distributors who earn money both from selling and from recruiting new distributors beneath them. It's legal — as long as income genuinely comes from real product sales to real customers.
The danger zone: when distributors earn mostly from recruiting and are pressured to buy inventory themselves, an MLM starts functioning like an illegal pyramid scheme. Most participants in most MLMs make little or nothing.
Legal in structure, frequently brutal in outcome. Read the company's own income disclosure before you join anything with a 'downline.'
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.