A pyramid scheme makes its money by recruiting new participants and collecting what they pay in, rather than by selling a product to customers. A product, if there is one, is only cover. Pyramid schemes are illegal.

Multi-level marketing (MLM) pays people both to sell a product and to recruit other sellers. An MLM stays a real sales business when customers buy the product to use it. It is a pyramid scheme when the money depends on signing up new people.

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