What Is Multilevel Marketing (MLM)?

Multilevel marketing (MLM) refers to a strategy used by some direct-salescompanies to sell products and services. MLM encourages existing members to promote and sell their offerings to other individuals and bring new recruits into the business.

Distributors are paid a percentage of their recruits’ sales. New recruits become the distributor’s network or downline and are, in turn, encouraged to make sales to earn money.

Many MLM schemes are legal, but there also are illegal operations run as pyramid schemes. This has cast some negative light on legitimate MLM businesses.