"(Questionably) legal version of chain letters."
In Multi-level marketing, the marketers buy their products from mother company, and sell the stuff as they please (mostly, I've seen, door to door
or just to friends). In addition to this, they get money from people they recruit as marketers.
Usually, marketers recruit the new marketers by promising that they will be able to make more money, choose their own job hours, be their own boss and such.
The problems with this model are many:
- Each marketer the marketer recruits becomes a competitor.
- Infinite pyramid isn't infinite. Can you really expect that everyone and their dog will, one day, happily sell soap to each other?
- If people want to buy soap, they buy it from nearest shop - and probably save money by buying it from there.
- Products the MLM folks sell are not usually that great, if you compare to equally priced things in shops.
- Charismatic leader and his/her followers chanting "sell, sell, sell." Does this sound a bit cultish to you?
- "Run away! There he comes again to sell his soaps..." ...annoy your friends and family...
See also: multi-level marketing scam
(Sources: "Pyramidisivut", by Teemu Mäntynen)