How MLMS stay 'legal'

One of the credibility-building factors that modern multi-level marketing (MLM) companies rely on is the assertion that they're legal. Often, it's said that if a company wasn't following the laws, they would have bee shut down by now.

Those things do sound credible. Average consumers assume that the government cracks down on businesses that are breaking the law. But the sad fact is that the FTC, the organization in charge of regulating MLMs and pyramid schemes, has chosen not to act against almost all MLMs.

Only a select few MLMs and pyramid schemes are targeted by the FTC. The rest are allowed to exist and operate as they please.

The key to avoiding being labeled a "pyramid scheme" by a government agency is having a "product" (or service) upon which your scheme is based. Traditional pyramid schemes only involve an exchange of money between people. MLMs skirt this by including a product in the mix – people are supposedly exchanging money for a product.