Browse Definitions :
Definition

multi-level marketing

Contributor(s): Ivy Wigmore

Multi-level marketing (MLM) is a sales and distribution model in which a business contracts with representatives to promote and sell the company’s products to customers, while also recruiting those customers to become representatives themselves. Amway is one example of a multi-level marketing company.

Representatives generally have to purchase the company's products to sell, display or demonstrate to potential customers. Recruiters usually keep some portion of the sales proceeds from the representatives they have recruited. That benefit is designed to motivate participants to recruit more participants.

Multi-level marketing has some of the same characteristics as a pyramid scheme and the two are sometimes confused. A pyramid scheme is an illegal sales model based on the idea that participants stand to make a great deal of money by recruiting additional individuals. Primary sales for the company are realized through selling products to participants rather than to customers and to collecting fees from participants.

In some cases, a pyramid scheme does not involve any products or services but simply asks recruits for money and tells them that the model ensures they will receive back many times what they invest. The individuals at the top of the pyramid receive money from the participants they recruit, who pay in the expectation that they will receive money from the individuals they themselves convince to invest.

How to spot a pyramid scheme:

This was last updated in May 2018

Continue Reading About multi-level marketing

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • data breach

    A data breach is a confirmed incident in which sensitive, confidential or otherwise protected data has been accessed and/or ...

  • zero-day (computer)

    A zero-day vulnerability, also known as a computer zero day, is a flaw in software, hardware or firmware that is unknown to the ...

  • Cybercrime

    Cybercrime is any criminal activity that involves a computer, networked device or a network.

SearchHealthIT

SearchDisasterRecovery

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

  • business continuity software

    Business continuity software is an application or suite designed to make business continuity planning/business continuity ...

  • business continuity policy

    Business continuity policy is the set of standards and guidelines an organization enforces to ensure resilience and proper risk ...

SearchStorage

  • business impact analysis (BIA)

    Business impact analysis (BIA) is a systematic process to determine and evaluate the potential effects of an interruption to ...

  • RAID (redundant array of independent disks)

    RAID (redundant array of independent disks) is a way of storing the same data in different places on multiple hard disks to ...

  • dedicated cloud

    A dedicated cloud is a single-tenant cloud infrastructure, which essentially acts as an isolated, single-tenant public cloud.

Close