MLMs vs. Pyramid Schemes: Understanding the Difference and the Biblical Cautions
- Chad Fisher
- Aug 8
- 5 min read
Updated: Sep 5
By Pastor Chad Fisher, sharing biblical insights to inspire and strengthen your faith and relationship with God.
Quick Answer: MLMs may be legal but often mirror pyramid schemes—structures where most participants lose money and only a few profit. The Bible warns against greed and exploitation (1 Tim 6:9–10; Philippians 2:4), urging believers to exercise wisdom, count the cost, and preserve integrity in all business decisions.
Multi-level marketing (MLM) companies often insist, “We’re not a pyramid scheme.” And legally, some aren’t. But as Christians, our standard isn’t only whether something is legal — it’s whether it is wise, ethical, and aligned with God’s Word.
Understanding how MLMs differ from illegal pyramid schemes — and where they overlap in practice — is essential for making a God-honoring decision about joining one.
Key Scriptures at a Glance
1 Timothy 6:9–10 – “Those who desire to be rich fall into temptation…”
Luke 14:28 – “Count the cost…”—a caution relevant to MLM participation.
Philippians 2:4 – “Look not only to your own interests…”—a warning against exploiting others.
2 Corinthians 8:21 – “Aim at what is honorable…”—maintaining integrity and a good reputation.
Proverbs 28:20 – “The faithful man will abound with blessings; but one eager to get rich will not go unpunished.”
What is a Pyramid Scheme?
A pyramid scheme is an illegal business model where the main way participants make money is through recruiting others, not through selling an actual product or service. Eventually, the system collapses because there aren’t enough new recruits to sustain it.
What is an MLM?
An MLM is a legal structure that sells real products or services but still relies heavily on recruitment for participants to earn significant income. While the product is technically the source of revenue, in many cases the sales model mirrors the pyramidal success structure — those at the top earn most of the money, while the majority earn little or nothing.
The Pyramidal Nature of Success
Even when an MLM is legal, success is usually concentrated in a very small percentage at the top.
Reality Check—Most Don’t Break Even:
A detailed FTC review of income disclosure statements from 70 MLMs revealed that most participants earn $1,000 or less per year—that's under $84 per month—and in at least 17 of those companies, most participants made no money at all Federal Trade Commission.
This mirrors broader analyses: one study of 350 MLM companies found that 99% of recruits lose money, reinforcing that consistent profitability is exceptionally rare throughout the industry Wikipedia.
"A false balance is an abomination to the Lord, but a just weight is his delight." — Proverbs 11:1 (ESV)
If earnings claims are vague or unclear—especially when recruiters dodge income questions—you have every reason to be cautious.
This is why Jesus’ warning in Luke 14:28 applies here: “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” (ESV)
If we step into a business model without counting the financial, relational, and spiritual costs, we risk poor stewardship of the time, money, and influence God has given us.
Where Lines Get Blurry
Many MLMs avoid the “pyramid scheme” label by having an actual product — but that doesn’t always change the practical outcome. If most sales are to the participants themselves, and if recruitment is the real path to profit, the effect on most people is the same:
High upfront and monthly costs.
Pressure to recruit friends and family.
Very low odds of profit.
Biblical Cautions for Christians: Avoiding Exploitation
Philippians 2:4 reminds us: “Let each of you look not only to his own interests, but also to the interests of others.”
If joining an MLM means others under you will likely lose money so you can gain, this raises serious moral and biblical concerns.
Guarding Your Witness
2 Corinthians 8:21 calls us to: “...aim at what is honorable not only in the Lord’s sight but also in the sight of man.”
When friends and church members see us primarily as sales prospects, our credibility and witness can suffer.
Practical Steps
Calculate real risks—financial, relational, and spiritual (Luke 14:28).
Investigate income sources—true product sales vs. recruitment earnings.
Protect relationships—avoid leveraging church or friends for profit (Philippians 2:4).
Evaluate financial outcomes—what percentage make real profit after expenses?
Live with integrity—choose pathways where God and others can trust your motives (2 Cor 8:21).
Key Questions to Ask Before Joining Any MLM
Is the majority of income from product sales to real customers or from recruitment?
What percentage of people in this company actually turn a profit after expenses?
Will I be pressured to use my church or Christian community as a recruiting base?
Can I be fully transparent about costs, risks, and the nature of the business without fear of losing interest from prospects?
FAQ About MLMs and Christian Faith
Is participating in an MLM a sin?
Not inherently, but if it leads to greed, harm, or dishonesty, it conflicts with biblical values.
How do I know if an MLM is exploitative?
Ask hard questions—does profit come from product value or recruiting others?
Why should Christians care about MLM ethics?
Because our witness matters—our actions reflect Christ to others (2 Cor 8:21).
What’s the biblical alternative to MLMs?
Faithful work, honest business, stewardship, and relational integrity (Colossians 3:23).
How can I discuss MLMs with others biblically?
Speak truth in love, share your concerns with compassion, and offer wise counsel rooted in Scripture.
Can MLMs coexist with Christian faith?
Only if they prioritize integrity, transparency, and mutual benefit—not quick gains or coercion.
Is it ever okay to join an MLM?
If the model is transparent, product-focused, and doesn’t exploit, you must still evaluate if it aligns with your calling and integrity.
Conclusion
While MLMs are not always illegal pyramid schemes, their structure often mirrors the same pitfalls: most lose money, a few at the top prosper, and relationships can be damaged in the process.
As followers of Christ, we are called to exercise discernment, avoid causing others harm for personal gain, and choose work that reflects integrity both before God and others.
If you want a deeper, biblical breakdown of MLMs — including the financial, relational, and spiritual risks — read our full guide on What the Bible Says About MLMs.
Want more insight on this topic, read:
The Financial Realities of MLMs: A Biblical Stewardship Perspective
How MLMs Can Harm Christian Witness and Damage Church Relationships
Regular Business vs MLM: What’s the Difference for Christian Entrepreneurs?
MLMs and the Danger of Selling the Dream Instead of the Product
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Written by Pastor Chad Fisher — Pentecostal Pastor & Bible teacher with 30+ years of ministry experience and author of several Christian books. Learn more →
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