Based on Fundera, MLM “is a type of direct selling that some companies use to incentivize independent representatives to sell products or services to end consumers. The multi-level aspect comes from the ability to recruit and add additional representatives of each rep. sell their goods to the person who employed them.” In other words, while a portion of the consultants’ income comes from direct selling, to To really succeed at an MLM like Younique, you also have to recruit more and more people below you. This is where the comparison with pyramid schemes comes into play, as the system looks exactly like a pyramid. What separates it from an illegal pyramid scheme is that the consultants are actually selling an actual product.
However, the truth is that only 25% of all MLM consultants switch to any profit at all (through the Fundera). That means a whopping 75% MLM the seller never earns a dime. How did this happen? Most of the time MLM consultants have to buy the product upfront and then try and sell it to others. If they can’t sell them all, or if they’re not good at getting people to sell below, they might end up with a garage full of products and luckily even break even. This is why, even though MLMs are largely legal, many still consider them a scam.
https://www.thelist.com/747369/is-younique-an-mlm/ Is Younique an MLM?