Reviewed and updated 20 October 2026.
Network marketing, also called multi-level marketing or MLM, involves selling through a network of participants. Before joining, examine the economics and obligations carefully rather than relying on success stories or promises of flexible income.
Understand how money is earned
Read the compensation plan in full. Ask how much depends on sales to customers outside the participant network and how much depends on recruitment or purchases by participants.
The U.S. Federal Trade Commission warns that some MLMs are illegal pyramid schemes. A business having real products does not, by itself, settle that question.
List all likely costs
Include enrollment, required stock, recurring purchases, training, events, delivery, travel, advertising and the value of your time. Ask which costs are optional in practice and which affect eligibility for compensation.
Read refund and cancellation terms before paying. Keep copies of the documents and avoid relying on a verbal promise that unwanted inventory can always be returned.
Examine earnings claims critically
- Does the disclosure include people who earned nothing?
- Are figures before or after expenses?
- Does an average hide a large difference between typical and exceptional outcomes?
- How many people are represented, and for what period?
- Can the company substantiate the claims being made to you?
Do not treat a photograph of a lifestyle or one participant’s experience as evidence of likely earnings.
Watch for pressure
Be cautious if you are urged to decide immediately, borrow money, buy more stock than you can sell or recruit friends and family before understanding the offer. Take time to compare alternatives that use your skills without the same commitments.
This guide is a starting point for due diligence, not an endorsement of a company or a legal assessment of a particular plan.
Source: FTC: Multi-Level Marketing Businesses and Pyramid Schemes.
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Cover photograph: Vitaly Gariev / Unsplash.