How Do MLM Companies Defend Themselves Against Being Classed as Pyramid Schemes? - How Money Works | How Money Works
Jan 18, 2026
Multi-Level Marketing (MLM) companies continue to thrive despite criticisms labeling them as pyramid schemes. Critics may misunderstand day-to-day operations, leading to a skewed public perception. Most participants join with low business expectations, often facing financial losses. The discussion compares MLM membership dynamics to conventional discount clubs, revealing varied motivations. The podcast explores the pricing strategies of MLM products and argues that success in this field often depends on sales skills rather than the promise of quick wealth.
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insights INSIGHT
Growth Despite Reputation
MLMs keep growing despite bad reputations because critics misunderstand day-to-day operations.
Public misunderstanding helps explain how the industry continuously recruits new participants.
insights INSIGHT
Most Join For Discounts Or To Avoid Pressure
Many people join MLMs not to run a business but to get member discounts or to placate recruiters.
This creates a large pool of inactive customers who distort income-statistics and public perception.
question_answer ANECDOTE
Buying Signup Packs To Silence Recruiters
The host describes people buying signup packs just to stop persistent relatives from recruiting them.
These purchase decisions often leave products unused and count recruits as non-earning members.
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How Do MLM Companies Defend Themselves Against Being Classed as Pyramid Schemes? - How Money WorksSign up for my newsletter https://compoundeddaily.com 👈Multi-Level Marketing Companies or MLM’s rightfully get a fair bit of criticism in the news, across social media, and even in social groups that are aware of their less than upstanding business tactics.However, despite this almost universal bad reputation, Multi Level Marketing Companies have grown in size year on year, bringing in an ever-larger pool of unsuspecting victims.This reality flies in the face of what the critics often say about such schemes, which is that they are fundamentally unstable pyramid schemes that are mathematically guaranteed fail.If that was the case, then this now decades old industry filled with decades old companies is sure taking a long time to live out the apparent certainty.So were the critics wrong about this one? Well as regular viewers of the channel may know, I hate video’s that drag out the a simple question unnecessarily. So the short answer is no, they are not wrong about the industry as a whole, but they do get a lot wrong about their day to day operations, and this public misunderstanding may actually be key to explaining how this industry keeps on growing.So it’s time to learn How Money Works by defending the indefensible, a new series that I hope to launch, depending on how well this video goes.#MLM #PyramidScheme #HowMoneyWorksMusic by Epidemic SoundFollow to learn How Money Works.Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorksDisclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video content remain with How Money Works. For any concerns, inquiries, or content-related requests, please feel free to reach out.--------------------------
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