What is the difference between Direct Selling, MLM (Multi Level Marketing) and Pyramid Schemes?
Direct Selling is the sale of a consumer product or service by an independent sales Representative who are also sometimes referred to as Distributors or Consultants. These direct sellers are not employees of the company rather they are independent contractors who market and sell the products or services of a company in return for a commission on those sales.
Multi Level or Network Marketing
Network Marketing is a way of doing business in which independent sales Consultants, Distributors and Representatives earn commission not only for sales of products and services they personally generate, but also from a percentage of the sales of others who they have recruited into the business. These recruits form a 'down line' of Distributors creating a hierarchy of multiple leveraged levels of commission.
Direct selling or network marketing should not be confused with pyramid schemes. Pyramid schemes are illegal in the UK and many other countries and is a type of fraud which is disguised to look like direct selling. Pyramid schemes are where recruits pay an admission fee to join the scheme to earn commissions on persuading other to join rather than supply any real investment or sale of products or services to the public. Pyramid schemes do not offer contracts to participants, cancellation rights nor the opportunity to buy back unsold goods - all of which are required under UK law.