Is network maketing illegal?

Looking at network marketing history we can see that it traveled a long path with all kind of obstacles. In the beginning people were looking at it as an illegal business. Due to the use and misuse of the business model a lot of questions rose back then if network marketing was legal. 

There are people today who still wonder whether network marketing is legal or not. If we go back in history and look at the creation of the first companies that used this business model, we see that the operations of the companies were viewed with skepticism. This way of working was new and there was a lot of mistrust. Is it an illegal business and penal? Or is it just another business model like any other we know?

The government steps in and network marketing becomes a full-fledged business model.
Following the advent of network marketing, there were many companies that wanted to abuse the  business concept for their dark purposes. Ultimately, steps were taken in America against these illegal companies. The Senate dealt with this form of consumer fraud in 1974 and banned the illegal companies. All companies operating according to the network marketing concept were scrutinized by the Federal Trade Commission (FTC). Amway, which was the largest network company at the time, was also vetted and threatened by the belief that the company was illegal, because they did not want to sell their products through traditional stores. Millions of dollars in lawsuits later their name was cleared and the FTC declared network marketing as a legal sales system. This triggered an explosion in network marketing companies.

Network marketing is a widely used business model 

Nowadays, there are thousands of companies that use the network marketing business model and can call themselves network marketing companies. These companies include good and reliable companies, both veterans and many newcomers, companies that have yet to prove themselves, etc.
But pay attention! There are also still rogue companies that abuse the business model and try to disguise their plans under the guise of network marketing. This isn’t always easy to recognize. 

FTC guideline towards network marketing in Europe

In Europe, the FTC's guideline is followed, and network marketing are seen as a form of direct sales, which does not use wholesalers and intermediaries. The version in which companies ask for money to participate and pay out when more and more people are recruited without the mention of customers and sales of services or products, is also prohibited in Europe. In that case, it is a pyramid scheme (; forbidden by law. Network marketing is legal and widely accepted by European governments.