They all sound the same to me!
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A MLM and a Pyramid scheme are often the same. Strictly speaking the difference is the exitances of a “real” product in an MLM but not in a Pyramid scheme.
In a classic Pyramid scheme the only real revenue comes from bringing new people into the system. There’s no such thing as a pure customer (someone who just buys product). Normally the entire focus of the system is in exclusively recruiting other people to sell the product, not ever selling the product to customers. Most often the new sales person is convinced to buy a “demo kit” or starter kit that’s filled with product for them to sell to “customers”. In reality the vast majority of the companies’ sales are these starter kits, rarely or ever individual products sold to individual customers. It’s important to note, a Pyramid scheme is not a crime, it’s just a shitty product and a bad value to anyone who gets involved. But not a crime.
MLMs do A LOT of this and this is where the confusion comes from. but in a traditional MLM there’s an actual real product being sold that some people want just for the sake of it being a good product. The best money is made by recruiting other sales people, but there are also real actual customers that exist. MLM products might not always be the best value products, or the best products in their class but the products are real and have actual value. The original Tupperware is an excellent example, it really was an innovative product that people used and liked. Unlike a pyramid scheme, the product in an MLM is often acceptably good, but like a pyramid scheme, it’s not a crime.
A Ponzi Scheme is a separate thing, it’s a fraud, a crime. There’s no real products being sold here, it’s basically taking people’s investment money and keeping it for yourself rather than investing it. You tell them you are investing it though. When old investors stat to want to see returns on their investments, you just take that money from new investors and give it to old investors and say “see, you did make money, why don’t you reinvest it with me again!” then they do, and you keep it.
A ponzi scheme is never a permanent thing, it’s always going to come tumbling down eventually. It’s inherently unstable and the moment you can’t get a “new” investor there’s suddenly no cash to give the old investors as a return and the whole thing crumbles.
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