Why Do Masses Think That MLM Network Marketing Is A Pyramid Scheme?

As far back as I can remember when I first started doing Network Marketing and talking to some friends about a business MLM opportunity. I could almost feel them rolling their eyes and sighing and it wasn’t long before one of them used the term that people in my industry hate the most “pyramid scheme.”


This term has been used to describe MLM network marketing and I could tell that my friends were already tainted with misinformation about what this opportunity really is. I started to wonder why so many people associated MLM network marketing with pyramid and ponzi schemes.  It led to a few conclusions and here is why many people associated MLM network marketing with these schemes.


Pryramid SchemeWhy people think network marketing is a pyramid scheme


Here are some of the biggest reasons why people see this business model as a scheme:


-They are misinformed: If you go on Google to look up MLM network marketing you will likely see dozens of articles that claim it is a scam. If you only read a few of these articles then it is easy to see why you might be suspicious of the validity of multi level marketing. This is because most of these articles only focus on the scams that exist and say nothing about the many MLM network marketing opportunities that are legit. The fact is that there are many MLM opportunities that are absolutely legitimate and offer great financial opportunities.  However, if you are writing an article you will probably get more traffic if it is negative, which is why so many people choose to write negatively about the MLM network marketing profession.


7 Online Business Secrets 2


-There are a lot of scams: Let’s face it, the reason there are so many negative articles is because there are a lot of scams out there. The problem is trying to separate the real opportunities from the pyramid schemes. Here are some ways to avoid the schemes:


-Do research and make sure the company has a good reputation


-Learn everything about the product and make sure it is a good one


-Ask a lot of questions


-Make sure you understand the commission structure and how it works


-Make sure you are selling an actual product, and not just recruiting people into a “plan”


-Talk to other people are in the company that you're researching


-Be patient and find a company that is actually a good opportunity that resonates with you



How to Avoid the Pyramid Schemes and MLM ScamsAvoid the scams


As long as you find a good company then there is no doubt that you can make a lot of money with MLM network marketing. By doing research you will quickly and easily be able to root out the businesses that are actually schemes. Just keep in mind that not all MLM network marketing opportunities are pyramid schemes, but you will need to do some work to find the good ones.


After I explained all of this to my friends they were much more open to the opportunity I presented them. The next time someone asks you and if you am selling a “pyramid scheme” you will know just what to say.


Have you ever come across someone who said that your deal was a pyramid scheme?  How did you handle it?  What did you say?  Would love to hear your thoughts!


To your Success,

Nate Leung

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Nate Leung

Nate Leung

CEO & Founder - Automated Profit Method
Hi, I'm Nate! I am the CEO and Founder of NateLeung.com, and Automated Profit Method, Author of "Virtual Entrepreneur: Live Free With the Business of Your Dreams". I help ambitious online entrepreneurs build wildly successful businesses that they are most passionate about. Step by step I show you how to build a business from scratch with the right strategies and systems in place, you can earn the income you know you deserve and have the kind of life you have always dreamed about. Ready for your business to support the kind of life you want to have? Contact Nate here.
Nate Leung
Nate Leung

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16 Responses to “Why Do Masses Think That MLM Network Marketing Is A Pyramid Scheme?”

  1. Giorgio

    Hi Nate my name is Giorgio i’m from Florida . I have a couple of investments but im about to get into a new one. i see that you have a lot of expertise in this are. Would you mind giving me your feedback on this one please?

  2. sherman smith

    Hey Nate,

    A lot of people have the wrong focus when it comes to MLM. I usually asked them what a pyramid is, what business is not set up like a pyramid, and then ask them what a pyramid scheme is. I rather for people to figure out the differences without me telling them..

    I also agree with Ryan. Most people are lazy thinkers. They don’t like to do research and look beyond the first page of Google. Sometimes they need a little boost…

    Great post Nate! Keep them coming!

  3. Donna Merrill

    Hi Nate!

    Thanks for bringing out this subject. Yes there are scams in this world, but when you think of many MLM companies that have been around for years a “scam” just doesn’t make sense to me.

    I’ve even heard people say blogging is a scam. Whatever the case may be, it could be a person that got burned because they didn’t follow a good marketing plan, or worse, one who has no idea of what MLM Marketing is all about.


  4. Tonya Stephens

    Hi Nate,
    Great blog post. Too many people have the wrong idea about MLM and for good reason. Unfortunately that’s one more obstacle we in the industry have to over come when talking to prospects. Thanks for spreading the word that MLM is a legit business model unlike no other.

  5. pam schmidt

    So many people connect any online marketing system with pyramid schemes and scams. You have written out a great defense of legitimate companies.

  6. Ryan Biddulph

    If people would look beyond the first page of google they might realize this; due diligence separates scams from legit ventures.

    Many people are lazy thinkers, allowing other people to handle their thinking for them. If I fell into this monstrous crowd I would not have been in the game for this long.

    Well said Nate….keep on sharing the industry in a positive light!!

  7. Charlien Otto

    Awesome post Nate…I was a real skeptic when I first started and now I couldn’t be happier in my business. I had a few people telling me that it’s all part of a Pyramid Scheme. I just replied that I’ve done my research and that I’m the one doing it. Every one should do research when deciding to do network marketing.

    • Nate Leung

      Hi Charlien,

      That’s all that matters where people are making assumptions or judgement based on little facts and not understand what a Pyramid really is. Thanks for the comment!

  8. Katrina Yarber

    This is an excellent post! Not too long ago I was so sick and tired of people asking me if this was a pyramid scheme and I simply said back, “pyramid schemes are illegal, this is not!” They didn’t say another word. I know it didn’t explain anything… but it worked1 KROFLOL

    • Nate Leung

      That’s a very good way of handling that objection! An old mentor told me how he used to handle that question and he said, “Have you ever seen me do anything illegal”?

      The answer was always no and he was able to overcome those objections every time.

      I believe what it boils down to is most people just want confirmation, if they spit out the words pyramid, it’s really because they just need clarification. I’ve learned that over the years.

      Thanks for the input Katrina!

  9. Stefani McCune

    I’ve wondered this same thing Nate. And I’ve had many people ask the Pyramid question. It hurts my feelings that they ask that. But they are really just not informed.

    Luckily I haven’t been involved in any of the scams. I sure wouldn’t want to lead anyone down that path!

    • Nate Leung

      Hi Stefani,

      Yes, it’s just that they are not informed. I can agree with you on that. In the beginning, I used to think that anyone who asked me that question was negative and the more I realized, it wasn’t the case. I believe that there are some that are going to say it because they might have heard it in passing, or some my have had an experience with it but do not understand the concept of Network Marketing.

      It is a place where most come from an employee mindset and that they were conditioned to think otherwise. So, even though it’s comes off as offensive, it really boils down to them not fully understanding what Network Marketing is.

      Thanks for stopping by Stefani. 🙂