Quote from: Harlot on March 06, 2019, 05:51:00 AM

MLMs can be recognized in a lot of things all of which relates to commissions on the top of the pyramid. They mostly refer it too level 1,2, 3 and so on commissions that even if the top of the pyramid hadn't recruited someone below him he will still earn from him. With the endless possibility of earning a lot of MLMs fail as they will always run out of money to pay the top users back. And to top it all there is really no business happening new members are just paying of the old members and that how the cycle continues.

Basically you won't get paid anything until you manage to convince a number of people (victims) to invest in the scheme. After all, its from them the actual money is coming from... That's how you recognize them. Most won't let you quit right away (after you invested) and give you a refund. I knew one that allowed refunds but only for 24 hours.., i guess to comply with local laws (somewhere, often NOT your country, but some fiscal paradise).

The very early ones to enter and leave might be the only ones able to cash something, but it depends on the life of the MLM. I read some estimations say about 8% can profit, so 8 in 100 people will gain at the expense of the other 92 who will lose all.

How long they last? Until someone or group finds out and convinces enough people its a scam; then it bankrupts. Similar to a bank run (and fractional reserve banking is similar to a Ponzi scheme). Basically it lives and dies by word of mouth.

IF its a business that uses some MLM style marketing, but the main income comes from selling actual products or services, then you should research further. If you are selling soaps and get a commission for each one sold but you also manage to recruit people to sell them and earn like 1% of their cut for each sale they do, its still the soap that is making most of the profit, not the people joining to work under you and expand your network.

Sometimes they are very clever and blurry the lines, its not always easy to recognize. You might think they are earning their main profits with another (actual) business when in reality they are doing pure MLM. Sometimes they happened to have another business but secretly isn't doing well, or they buy an actual business (possibly failing) and try to combine it with MLM to give it a decent facade.