Wikipedia: Multi-level marketing

Multi-level marketing (or network marketing) is a business model. Typically, independant business owners (IBOs) are associated with the company in a contractor-like relationship. IBOs are remunerated for shopping within their own business, by selling products and by expanding their network of people doing the same. An IBO receives a percentage of the profits generated by the network of all IBO's introduced to the system by him or her, and also of the profits generated by the people introduced by those IBO's, and so on. Rewards are tracked with a point system, where the points represent the volume of products sold through the IBO's network.

Multi-level marketing has a well-known image problem, because there is not always a clear distinction between legitimate network marketing and illegal "pyramids" or [Ponzi scheme]?s. There are, nonetheless, many legitimate NM/MLM businesses operating around the world. See Companies for more info. Critics contend that some companies produce revenue primarily by attracting new participants, as opposed to selling products. Amway (the world's leading company in network marketing, with annual turnover exceeding USD $1 billion) in particular is often criticized for the fact that it generates considerable revenue from selling instructional and motivational materials to its participants. The company was indicted by the US Justice Department, but was acquitted.