MLM is a business model involving the direct selling of products or services through the personal recommendation or endorsement of independent representatives. If you are the representative, you receive a commission on the sale for giving the recommendation or endorsement. Most products that use MLM are not advertised in the mainstream media or in stores.

MLM goes on to create an upline and a downline through recruiting. As an independent representative, you recruit other independent representatives to directly sell those products and services (your downline). You receive a commission on their sales. Your upline includes your recruiter, the person who recruited him/her, and so on. They earn a commission on your sales. In fact, it is not so different from multi-tier affiliate programs.

However, this structure is how most people confuse MLM with a pyramid scheme. With MLM, the products or services sold have a proportionate value to the amount invested. In a pyramid scheme that value is highly disproportionate or the scheme just involves the basic transfer of funds up the pyramid. For instance, the most classic pyramid scheme is the one where you get a letter telling you to mail money to the person at the top of the list, cross it off, and put your name at the bottom. Then you mail out letters to so many people and eventually reap the rewards when your name gets to the top of the list, which it never does.

It is important to note pyramid schemes that are disguised as MLM programs, as there are some people out there trying to take advantage of those wanting to get involved in MLM programs. If you are looking to get involved in an MLM program, then make sure that your investment is proportionate to the product or service you will be selling. Remember, pyramid schemes are illegal, and you participate at your own risk.

Read the rest of the article here: What is MLM and Can It Be a Valid Home Based Business?.

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Article written by Charles Fuchs
Copyright © Charles Fuchs is an established Six Figure Income earner and one of the top online marketer's. He specializes in showing people the Best Home Based Business and the Best MLM on the internet.

MLM is a legitimate business model, but some people have chosen to create MLM scams from this model. You really can, with a lot of work, make good money with MLM, which is a multi-level marketing business model. Also known as network marketing, you have an upline and build a downline while selling unique services or products. The problem is, while this model is legitmate, there are a lot of people creating MLM scams and illegal schemes that have smeared the MLM name.

So, what are some common MLM scams? The most popular MLM scam is very much illegal, and it is has been around for the longest time. In a pyramid scheme, a company will offer large profits if you invest in their program. Do you actually sell the products? No. This is one of those MLM scams where the money is paid in without you ever seeing any money for the products.

Another one of the most common MLM scams is called a Ponzi scheme. This is similar to the pyramid scheme, but with one difference. With a Ponzi scheme there is not actually a product. The company promises you large returns if you invest with them, but they only take the investment to pay off the people who have been in the program longer.

With these type of MLM scams the promises sound legitimate, but the companies will most likely take your money and run. So what are the things you should look for to tell if you are dealing with one of those MLM scams?

First, ask if the company is more interested in bringing in new members than selling any product. After all, new members mean more competition, especially if there are not a lot of products to sell.

Also, beware of companies that want you to purchase a lot of product or inventory before you begin selling. MLM scams often require that you purchase items that are backordered, or you will purchase the items and never see them.

MLM scams often make preposterous claims about their products. The advertisements are extremely exaggerated, and if the ads sound to good to be true, they probably are. These exaggerations are most common with MLM scams that promote nutritional supplements. So check into them carefully.

Read the rest of the article here: MLM Scams.

Download the Home Based Business Manual (Free $97 Value!) and receive valuable tips, strategies and techniques designed to grow a very successful Home Based Business.

Article written by Charles Fuchs
Copyright © Charles Fuchs is an established online marketer who specializes in helping people start their very own Home Based Business. He specializes in showing people the best way to start a Home Based Business Idea.