MLM stands for "multi-level marketing," and it is often referred to as one of the most popular free work from home programs online. Sometimes, it's referred to as network marketing.

A quick breakdown of MLM goes like this: the person likes the product, they decide to sell it, they become an independent representative, they work off commission, and they recruit a downline.

For years, the term pyramid scheme has been used to refer to a "recruitment and referral" system. If this label applied to every MLM system, it could apply to just about any type of affiliate marketing, franchising, or investment opportunity. That's simply not the case. A pyramid scheme is set up so that only the person at the top gets paid.

In MLM, if you refer a customer, you get paid. Seems fair and honest to me. Here's how it works; you have an upline and a downline. Your upline is the sponsor or person who recruited you. Your downline are the people that you mentor. The top of the company is the owner or founder. The people below them are their first recruits.

Your downline is essential to making money. Nevertheless, don't overlook the potential in your non-affiliated customers.

As you build your downline, each referral you or someone in your downline makes, you get a commission or straight fee off of. For example, let's say you make a direct sale. You're profit might be 50%. A second level sale could be 20%, and a third level sale could be 10%. And on down the line it goes.

Most MLM doesn't overlap over five levels. Otherwise, there wouldn't be enough commission to pass around and still pay for the product or service. The company, itself, usually makes a standard profit of about 15%. This is the beauty of one of the most popular and effective free work from home programs.