MLM, or multi level marketing, is a technique where a product or service is promoted through a whole group of people. Each person in the group searches high and low for another person who could be recruited and placed in his down line. The more people recruited by you the more you earn because every time someone in your down line makes a sale he or she earns, and you earn a portion of the sale as well. So it is in your interest to get as many people to sell the product as you possibly can.

There is a problem with this system though and that is the fact that there can be an end loser if the product being sold meets what is called a market saturation point. Another way an MLM can fail to yield profits is when the MLM is a pyramid scheme, better known as a ponzai scheme. There are ways to detect this that we will endeavor to explain in this article. However, first we must explain an MLM ponzai scheme.

A ponzai is a program where there is definitely an end loser. Let us take a simple MLM scheme where people had to buy in for a few hundred dollars then they had to get others to buy in for the same amount in return for a percentage. After they got a certain number of people to sign up they recovered their money and there after it was profit all the way. And when each member they recruited managed to enlist another member they both earned a percentage. Each member tries to get people to sign up and the list continues to grow. Eventually there will be very few or no one wiling to enlist in the program and this will lead to losses for the people at the bottom of the list. It is easy to spot these scams.

Apart from using common sense to spot MLM scams there are web sites that are dedicated to exposing MLM scams. A simple search on any of the popular search engines will reveal whether the MLM you are contemplating signing up for is a scam or not. There are also government registered sites that display legal notices served to MLM scams.

In the final analysis, it should be noted that it is not in the interest of anyone to jump into an MLM program without the due research and in-depth study of the program and the management behind the scenes. The integrity of the management is of greatest importance as is the product that they are selling. If the product has no commodity value the MLM is as close to a scam as it can get.