Legitimate MLM vs Direct Selling Products (India-focused explanation)
1️⃣ Legitimate MLM (Multi-Level Marketing)
What it is:
A structured direct selling model where distributors earn income from actual product sales and, secondarily, from team sales — not just recruitment.
Key characteristics
Real, useful products/services with market demand
Income mainly from retail sales
Recruitment is optional, not compulsory
Transparent compensation plan
Buy-back / return policy
Registered under Direct Selling Guidelines (India)
Income reality
No guaranteed income
Earnings depend on sales performance
Example products
Nutrition & wellness products
Personal care & cosmetics
Home care products
2️⃣ Direct Selling (Single-Level / Two-Level)
What it is:
The simplest and safest model of product distribution — you sell products directly to customers and earn commission.
Key characteristics
No downline pressure
Income = sales commission only
Low joining cost
Clear invoices & GST billing
Often part-time friendly
Income reality
Predictable but limited growth
No passive income from teams
3️⃣ Illegal MLM / Pyramid Scheme (⚠️ Not Legitimate)
What it is:
A money circulation scheme where earnings depend mainly on recruiting new members, not selling products.
Red flags
High joining fees
“Guaranteed” monthly returns
Focus on recruiting, not selling
Fake products or overpriced items
No buy-back policy
Payments from new members’ money
🚫 Illegal under Indian law (Prize Chits & Money Circulation Schemes Act, 1978)

How to Verify Legitimacy (Before Joining)
✔ Check if income is sales-based
✔ Ask: “Can I earn without recruiting?”
✔ Read the compensation plan
✔ Look for product return policy
✔ Avoid schemes promising fast or fixed income