Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation.
MLM companies have been a frequent
subject of criticism as well as
the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price-fixing of products,
high initial start-up costs,
emphasis on recruitment of lower-tiered salespeople over actual sales,
encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets,
complex and sometimes exaggerated compensation schemes, and
cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.
src:
Multi-level marketing - Wikipedia, the free encyclopedia