Is Affiliate Marketing A Pyramid Scheme? Pros & Cons In 2022

Make Money Online Updated: September 11, 2022 by Eddy Ballesteros

Are you looking to start a brand new side hustle but wondering if affiliate marketing is a legitimate business model? Here's what you need to know.

In a nutshell, affiliate marketing is performance-based marketing in which a business rewards an affiliate for each new customer or sale they generate.

So you can see why the feeling of selling someone else's product feels strange, and it makes sense for anyone to feel that way.

My name is Eddy, and I've been doing affiliate marketing for a few years. I'm happy to share with you my own thoughts on this topic and the main difference between a scam and a real opportunity.

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There's a lot of debate on whether affiliate marketing is a pyramid scheme.

I want to clear the air and give you my two cents on the matter, so let's answer the big question.

So, Is It A Pyramid Scheme? The Short Answer.

No, affiliate marketing is not a pyramid scheme. In a pyramid scheme, participants only make money by recruiting more and more people into the scheme. 

This is not the case with affiliate marketing. Affiliates make money by promoting products and services, and they only make a commission on any resulting sales. 

No recruitment is involved in affiliate marketing, so it cannot be considered a pyramid scheme.

That being said, there are some similarities between the two types of programs. Both involve making money by promoting something to others.

However, the key difference is that no product or service is sold in a pyramid scheme. In affiliate marketing, there is always a product or service being promoted.

If you're considering joining an affiliate program, research to make sure it's legitimate. 

Is Affiliate Marketing legal?

Yes, affiliate marketing is perfectly legal. It's a common way for companies to expand their reach and for individuals to make money.

Some people worry that they might be violating the law if they're not careful with how they promote products or services, but as long as you're honest and transparent about your affiliations, you'll be fine.

You'll also want to include an affiliate disclaimer on your blog and that is just one of the many blogging tips I talked about.

The bottom line is that affiliate marketing is a legitimate way to make money, but it's not a get-rich-quick scheme.

You'll need to put in the time and effort to build relationships and effectively promote products or services.

If you're willing to do that, you can succeed.

The Difference between Affiliate Marketing And Pyramid Schemes

You've probably heard of affiliate marketing and pyramid schemes before, but what's the difference between the two?

Both programs can be found online and promise to make you money. So, which one should you choose? Keep reading to find out. 

What is Affiliate Marketing?

Affiliate marketing is the process of earning a commission by promoting other people's (or company's) products. You find a product or digital service you like, promote it to others, and earn a piece of the profit for each sale that you make.

When done correctly, affiliate marketing can be a great way to earn some extra income.

How Does it Work? 

Let's say you have a blog about credit repair. You sign up for an affiliate marketing program with a company that sells credit repair services or tips. Once approved for the program, you get a unique affiliate link that you can share on your blog and start making money online. 

You earn a commission if someone clicks on your affiliate link and buys something from the company. The amount of money you make depends on the product price and the commission percentage offered by the company. 

Most companies also offer bonuses for achieving certain sales milestones. For example, you might earn an extra $100 bonus if you bring in $1,000 worth of sales monthly. 

What is a Pyramid Scheme? 

A pyramid scheme is an illegal business model that involves promising participants payment or services for enrolling other people into the scheme. 

Pyramid schemes are unsustainable because there are not enough new recruits to support everyone as they move up the pyramid. 

What is a pyramid scheme

So, what's the difference? 

The key difference between affiliate marketing and pyramid schemes is that an affiliate marketing business is a legitimate way to make money, while pyramid schemes are not.

 Being an affiliate marketer, you earn a commission on sales made by people who click on your affiliate link. With pyramid schemes, you're promised payment simply for recruiting new members into the scheme. 

A pyramid scheme is a very unsustainable business model and not a great way to start an online business.

What Are The Similarities Between Affiliate Marketing And Pyramid Schemes?

The main similarity between affiliate marketing and pyramid schemes is that they are both ways for people to make money.

With affiliate marketing, you are rewarded for bringing new customers to a business. With a pyramid scheme or multi-level marketing, you are rewarded for enrolling new members into the scheme. 

Both are considered online marketing, but with MLMs or pyramid schemes, you need to start promoting the dream instead of the solution right away.

If you are good at promoting products or services and have a large social media following, you can start earning affiliate commissions fairly quickly.

Similarly, with MLMs or pyramid schemes, you can start making money as soon as you enroll other members and have them sell products or services. 

I personally don't enjoy selling to my friends and trying to convince people to join a pyramid scheme.

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Is Affiliate Marketing better than MLM?

There is no easy answer to this question. It depends on what you are looking for and what person you are.

Affiliate marketing might be a better option if you want to be your own boss, have more control over your income, and don't mind taking a little bit longer to start seeing results.

If you want to make money more quickly and don't mind recruiting friends and family, MLM could be a better option.

It really depends on your own preferences.

P.S: I think affiliate marketing is one of the best business models.

Frequently Asked Questions

Are Affiliate Marketers Scammers?

No, Affiliates are not scammers and only make affiliate income from direct sales. They do not make any revenue through tiered memberships.

Affiliates also have complete control of their income and what they can say and promote different affiliate networks, products, and services. 

Are there any other benefits of affiliate marketing?

Yes! In addition to being your own boss and having control over your income, affiliate marketing also offers:

  • The ability to work from anywhere in the world
  • Flexible hours and gradually increased sales
  • No inventory to worry about
  • No shipping or customer service
  • Run promotions through email marketing campaigns

And more much that you can explore once you get started in this business model.

Can You Trust Affiliate Marketing?

Unlike MLMs, you can trust affiliate marketing because it's a sustainable business model that even Amazon offers its users.

There are many different affiliate networks and companies to choose from, so you can be sure to find products and services that you trust.

You can also read reviews of different affiliate programs before joining to get an idea of what other people think.

You can get a better understanding by reading my blog post on affiliate marketing tips.

Why Is Affiliate Marketing A Pyramid Scheme?

Most beginners or those scammed by a high-ticket course think that affiliate marketing is a pyramid scheme.

It is not a pyramid scheme because you're only making money from the product or service that you're promoting.

You're not making money from people who join after you. Also, there's no guarantee that you will make any money from affiliate marketing.

It takes hard work, dedication, and time to start seeing results. If you're looking for a get-rich-quick scheme, then affiliate marketing is not for you.

So, Is Affiliate Marketing A Pyramid Scheme?

No, affiliate marketing is not a pyramid scheme, and you do not have to pay for any startup costs to sell products or services online.

You can start affiliate marketing with just a website and social media accounts like TikTok or YouTube.

So, if you want a profitable business without selling products via network marketing, become an affiliate marketer.

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About the Author

Ever felt like you should be doing more with your business or blog? I felt the same way until I learned how to focus on income-producing activities and scale my businesses. My name is Eddy Ballesteros and I'm known as the Friendly Entrepreneur. Check out my best product reviews and make money online guides!