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.

SearchCompliance

  • risk assessment

    Risk assessment is the identification of hazards that could negatively impact an organization's ability to conduct business.

  • PCI DSS (Payment Card Industry Data Security Standard)

    The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures intended to ...

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

SearchSecurity

  • tokenization

    Tokenization is the process of replacing sensitive data with unique identification symbols that retain all the essential ...

  • incident response

    Incident response is an organized approach to addressing and managing the aftermath of a security breach or cyberattack, also ...

  • Federal Information Security Management Act (FISMA)

    The Federal Information Security Management Act (FISMA) is United States legislation that defines a framework of guidelines and ...

SearchHealthIT

SearchDisasterRecovery

  • call tree

    A call tree is a layered hierarchical communication model that is used to notify specific individuals of an event and coordinate ...

  • Disaster Recovery as a Service (DRaaS)

    Disaster recovery as a service (DRaaS) is the replication and hosting of physical or virtual servers by a third party to provide ...

  • cloud disaster recovery (cloud DR)

    Cloud disaster recovery (cloud DR) is a combination of strategies and services intended to back up data, applications and other ...

SearchStorage

Close