Understanding Direct Selling vs. MLM vs. Pyramid Schemes
The terms get used interchangeably, but the differences matter — legally and practically. A clear-eyed guide for anyone evaluating the industry.
Few industries suffer from more terminology confusion than direct selling. Let's clear it up.
Direct selling is the umbrella term: selling products directly to consumers outside a fixed retail location. This includes single-level models (like classic door-to-door sales) and multi-level models.
Multi-level marketing (MLM) is a subset of direct selling in which distributors earn from their own sales and from sales made by people they recruit. MLM is legal in most countries when properly structured around genuine product sales.
A pyramid scheme is an illegal model in which compensation is driven primarily by recruitment rather than product sales to real end customers. The product, if one exists, is a pretext.
The key distinctions to evaluate: Where does the money come from? In a legitimate company, most revenue comes from customers who are not distributors. Is inventory loading required? Legitimate companies don't force large purchases. Are earnings claims realistic? Check the income disclosure statement.
Our directory lists companies across the direct selling spectrum and provides the information you need to do your own research. Every listing is free, and no company pays to be included — featured placements are distributor visibility products, never endorsements.