Is Network Marketing Legal?

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Updated: April 2026 Oleksandr Honcharov, CEO at FlawlessMLM Is network marketing legal? Yes. Network marketing is a legal business model in most countries, including the United States, Canada, the EU, Australia, India, and Japan. It is regulated by consumer protection agencies such as the FTC in the U.S. and the ACCC in Australia. What Makes It Legal Network marketing is legal when it meets specific criteria: the company sells real products with genuine consumer demand, the majority of revenue comes from product sales to end customers (not from distributor recruitment), and the compensation plan is transparent and based on sales volume. Is affiliate marketing legal? Yes, and it is a separate model entirely. Affiliate marketing involves promoting products through referral links and earning commissions on sales. It does not involve recruitment or building a team. Network marketing becomes illegal only when it crosses into pyramid scheme territory: when revenue depends on recruitment fees rather than product sales. Regulators around the world distinguish between the two based on this criterion. Definition: Network marketing is legal in most countries as long as it is built on genuine product sales to real customers, operates with a transparent compensation plan, and does not depend on recruitment fees as its primary revenue source. If you are considering a network marketing opportunity, verify that the company complies with local regulations and that its income comes from real product sales, not from signing up new participants.

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