If you have a multi tier affiliate program could that be considered a pyramid?

11 replies
Just to clarify as I already got the feedback I wanted, thank you, I was talking about how many people might understand what an affiliate program is. .

But someone told me that if the affiliate programs are profitable. Is that true? Or are they misinformed?
#affiliate #considered #multi #program #pyramid #tier
  • Profile picture of the author Sid Hale
    Originally Posted by Nina Petrov View Post

    could that be viewed as an MLM or network marketing or pyramid scheme?
    Short answer - Yes.

    In reality (i.e. the longer answer), the payment processors tend to disallow any multi-tier payment scheme (even two-tier) without labeling them as MLM.

    Case in point...
    According to Paypal's Acceptable Use Agreement, any multi-tier payment scheme MUST be pre-approved by Paypal. They do not even want their company name mentioned on a page that promotes multi-tier payments.

    It is my understanding that some merchant accounts DO allow Multi-tier payment schemes, but they may be difficult to find and probably have fairly significant reserves on the funds to protect them against refunds.
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  • Profile picture of the author JohnMcCabe
    Originally Posted by Nina Petrov View Post

    If you have a multi tier affiliate program on your site. It's free to join. But you have it as say 2 or 3 tiers, could that be viewed as an MLM or network marketing or pyramid scheme? I can't see how it would as the affiliates don't ever pay anything. I think that's the big difference between Affiliate programs and MLM.

    But someone told me that if the affiliate program is 3 tiers or more it's apparently risky, even if it's free. Is that true? Or are they misinformed?
    You've been misinformed. In the US at least, MLM programs are required to provide a means of joining the program without a fee. They will make it hard to find, won't talk about it unless it's to encourage the paid version, etc., but it will be there.

    By definition, any marketing plan with more than one tier is multi-level.
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    • Profile picture of the author Tsnyder
      Originally Posted by JohnMcCabe View Post

      You've been misinformed. In the US at least, MLM programs are required to provide a means of joining the program without a fee. They will make it hard to find, won't talk about it unless it's to encourage the paid version, etc., but it will be there.
      Close... the company must provide a means of buying the product
      without paying a distributor fee but it is perfectly legal to charge for a
      distributor kit at cost. In fact, the smart companies have figured out that
      the safest thing to do is to draw a very bright line between customers
      and distributors. No legit company is hiding anything these days.
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      • Profile picture of the author JohnMcCabe
        Originally Posted by Tsnyder View Post

        Close... the company must provide a means of buying the product
        without paying a distributor fee but it is perfectly legal to charge for a
        distributor kit at cost. In fact, the smart companies have figured out that
        the safest thing to do is to draw a very bright line between customers
        and distributors. No legit company is hiding anything these days.
        Thanks. I should have made the distinction between joining the program and buying the distributor kit.
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  • Profile picture of the author dave_hermansen
    All multi-tier marketing is not a pyramid scheme. Pyramid schemes are when people pay you to join and you use part of those payments to pay the people who joined under them. In a true pyramid scheme, no actual money or profits are generated; it's just people making money off of other people who join under them.
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  • Profile picture of the author ChrisBa
    Originally Posted by Nina Petrov View Post

    If you have a multi tier affiliate program on your site. It's free to join. But you have it as say 2 or 3 tiers, could that be viewed as an MLM or network marketing or pyramid scheme? I can't see how it would as the affiliates don't ever pay anything. I think that's the big difference between Affiliate programs and MLM.

    But someone told me that if the affiliate program is 3 tiers or more it's apparently risky, even if it's free. Is that true? Or are they misinformed?
    People could view almost anything as a MLM or network marketing or pyramid scheme... look at how a transition job works with the layers that roll up into the president/ceo, it's all perspective.
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  • Profile picture of the author skylikemake
    Yes, may be. But you need to show the difference to the people, as it's Affiliate marketing and have nothing to do with MLM
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    • Profile picture of the author Tsnyder
      Originally Posted by skylikemake View Post

      Yes, may be. But you need to show the difference to the people, as it's Affiliate marketing and have nothing to do with MLM
      Love to hear your explanation of the difference between
      a multi-tier affiliate program and any legitimate MLM comp
      plan. I've done both for many years and have never seen
      a real difference.
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      If you knew what I know you'd be doing what I do...
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  • I'm in an educational platform myself and the products that my customers buy are also 3 tiers compensation plan.

    I consider it as an extra benefit of creating truly passive income.
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  • Profile picture of the author newxxx
    if this is your own personal program, and you are offering a 3-tier program, i'd consult a network marketing attorney specialist
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  • Profile picture of the author AshleyRivera
    Legit MLM companies are not pyramid schemes, that is a common misconception. You are able to earn more money than your sponsor if you put more work in. Are you trying to form a multi-tier company?
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