What is Multi level marketing (MLM):

MLM also known as network or matrix marketing is a way of selling goods and services through distributors. These plans typically promise that people who sign up as distributors will get commissions two ways. On their own sales and on the sales their recruits have made.
Pyramid schemes a form of multi-level marketing involve paying commissions to distributors only for recruiting new distributors. Pyramid schemes are illegal in most states because the plans inevitably collapse when no new distributors can be recruited.
When a plan collapses, most people except those at the top of the pyramid lose their money. MLMs should pay commissions for the retail sales of goods or services, not for recruiting new distributors, MLMs that involve the sale of business opportunities or franchises.