They all sound the same to me!
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An MLM and a Pyramid Scheme are very similar, however a Ponzi scheme is different.
In an MLM or Pyramid Scheme, the revenue flow is pyramid shaped. The idea is that by encouraging members to recruit more people at the level below themselves, everyone above them gets more money. Lets imagine a very simple pyramid with 3 levels, A, B, C. A is the top, they are the head of the company. Beneath them, they have 5 people at level B, who are regional managers. Everyone at level B pays 10% of their income to the person at level A, so more people at level B means more money for the person at A. Beneath each person at level B is 5 people at level C, the sales people. People at level C pay 10% of their income to the person on level B who they report to. People at level A and B make their money from the people on level C, who are the ones actually turning profit by selling whatever vitamin supplement the company produces. People on level C are encouraged to recruit more people at level C; if they recruit enough, they get bumped up to level B, which means they don’t have to work anymore, just let the money flow in from the people beneath them on level C. Notably, in MLM at least, the company is actually selling a product. It might be an overpriced product of questionable quality, but there is an actual external source of income (at least in theory).
A Ponzi scheme works differently, and much more simply. A person is tricked into buying in with a large amount of money, say $100,000. Each month, the person running the scheme will send the victim a ‘return on investment’ of maybe $2,000. By simply paying back the victim their own money, the con artist fools them into believing that they have made a good investment, and even if the con artist keeps half of the initial investment, they still have enough money to keep paying the victim back for 25 months.. The victim then tells all their friends about this amazing investment opportunity, and they all buy in as well. So long as more people keep buying into the scheme, the pot of money keeps growing and the ‘return on investment’ checks keep flowing outwards. The person running the scheme keeps some of the money for themselves, and then simply slowly hands back the rest of it without actually doing anything with it, never investing it in anything like they said they would.
While both MLM/Pyramid schemes and Ponzi schemes are reliant on more people buying in in order to keep themselves running, MLMs do actually sell stuff (which is why they aren’t illegal yet) where Ponzi schemes don’t.
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