text: MLM is legal because there is actually a product involved.  It's basically where you buy something from a distributor and then distribute it to someone else who distributes it again, and so on.  Eventually someone buys and consumes the products.  It's similar to all normal commerce, but the reason nobody makes any money is that after a few levels, there are so many middlemen marking it up that there is no more room to price it much higher and actually sell it.  That's why they tell you to sell to friends and family, because they are more sympathetic and are willing to pay more to be nice.\n\nPonzi as I understand it just involves sending money to people, and then getting other people to send money to you AND the people above you for a few levels, and then those people get even more people to send money to them and you, etc.  There is no actual commerce involved, and it is mathematically guaranteed to fail after some number of levels.\n\n"Pyramid scheme" is usually used synonymously with the Ponzi scheme, and they are all illegal except for the Federal Reserve and Social Security systems.