You remember incorrectly. MLMs are NOT illegal (at least not in all countries - all EU countries AFAIK allow MLMs as long as they are not built on the sole purpose of inviting people for their entry fee commission.
A great example is, again, AVON - all the sales rep are commissioned after their sales, not the entry fee. Or FLP - same MLM base, but better commission rates, AFTER sales. The key difference is that AVON reps are over-worked (at least here in Hungary), have to achieve a set monthly amount otherwise can say bye.

It is still not a Ponzi/pyramid scheme though, not entirely. Those are usually built on paying the commissions after the new members' entry fees, while MLM is pretty much paid after the product.