Millionaire Real Estate Investing with Jim Pellerin

Episode #119 - The Difference Between an MLM and a Pyramid Scheme

October 7, 2020

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Hey everyone, welcome to Top Essential Services.


I get a lot of questions about the way this product is being sold and the way the products that I represent are being sold. They are being sold through an MLM, which stands for multilevel marketing. And people will sometimes say … well, that's just a pyramid scheme, right? Well, let me explain the difference between a standard, a valid, a legal MLM, and a pyramid scheme.📊💲🔺

An MLM is something that is selling a product, a service, a product that you can actually use, and that you can consume and that is of benefit to people. 

So, in our case, we are selling internet services. We are selling telecommunications services and phones. We are selling electricity. We are selling gas. These are the services that we make available to our customers.💻📞⛽👨‍💼


And the way we do that is I can find those customers directly. But I also can get people to go out and find customers for me. I am the sponsor of these other salespeople that will work for me. Just like a realtor broker has salespeople, I have salespeople. Now, when these downline people get customers, they actually get their customers to buy the same services. And I earn a commission off of those sales as well. So that's why it's called multilevel marketing.👨‍💼👩‍💼💰📊💲


I earn a commission directly off people that are selling products for me. I also earn commissions off of people who are selling products for those downline people.

The difference between MLM and a pyramid scheme is that a pyramid scheme doesn't really have any products that they are selling.

In a pyramid scheme, all people are doing is they are going out and they are finding people to go out and sell products. Then they recruit more people to sell these products. But these products don't really exist. And what happens is everyone is getting paid for recruiting new members. And these payments are done by using the membership fees that they have to pay as a result of being part of this pyramid scheme.👨‍💼💲💳

It's pretty obvious when you're involved in a pyramid scheme because there's no real product that you're selling. 

There is no consumable service that you are selling. All you are doing is you are recruiting people to be part of this pyramid and you are charging them to be part of that pyramid. 

Obviously, you have to have a membership to be in a legal MLM, but the membership is offset by the revenues that you're generating through the sales of the products and the services. Okay. So hopefully that clears that up.💳📊💰

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