Judging whether this company belongs to pyramid scheme depends on whether the operating mode of this company conforms to the definition of pyramid scheme in national laws. MLM refers to the way that organizers or managers develop personnel to calculate and pay remuneration to the developed personnel on the basis of the number of personnel or sales performance directly or indirectly developed by them, or to require the developed personnel to obtain the qualification to join in order to obtain benefits on the condition of paying a certain fee.

At present, most MLM companies have been repackaged, confusing legal direct selling with illegal MLM business model to establish channels. Therefore, by correctly distinguishing between direct selling and pyramid selling, we can judge whether a company's business behavior belongs to pyramid selling.

There are essential differences between direct selling and pyramid selling:

1, direct selling: take goods directly from manufacturers and sell them directly to consumers.

MLM: Registration fee is necessary.

2. Direct selling: set up your own shop, order goods directly from the company and sell them to customers at one time.

MLM: You need to develop offline. It is necessary to constantly find collaborators to induce others to double their income under the guise of forming a team.

3. Direct selling: revenue is determined according to the quantity of products sold.

MLM: According to the number of people below and their business performance, you can decide how much return you have.

4. Direct selling: You buy one-yuan goods with 1 yuan.

MLM: Actually, to put it bluntly, you gave him 1 yuan, and he said he taught you how to earn 50 yuan. As a result, you give him 1 yuan, and he tells you to find ten more idiots like you.

Therefore, knowing these differences, we should make clear whether the company's sales model belongs to direct selling or pyramid selling.