Is Affiliate Marketing A Pyramid Scheme? Examples & Benefits 2023

Make Money Online Updated: November 20, 2022 by Eddy Ballesteros

Are you looking to start a brand new side hustle but wondering if affiliate marketing is a legitimate business model or if you've asked yourself this question, Is affiliate marketing legit? Here's what you need to know.

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.

If you purchase through our partner links, we get paid for the referral at no additional cost to you! For more information, visit my disclosure page.

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 on this passive income business model.

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 ensure 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 earn money.

Some people worry that they might be violating the law if they're not careful with promoting 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 recruits to support everyone as they move up the pyramid.  With these common scams, only the first person will make an income due to everyone at the bottom fighting for more sales.

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. 

Another big difference between the two is pyramid schemes are typically sold as get-rich-quick schemes. At the same time, affiliate marketing takes time and a lot of effort to build a successful affiliate marketing business.

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

What Are The Similarities Between Affiliate Marketing And Pyramid Schemes?

The main similarity between these two business models 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 (Multi Level Marketing) or pyramid schemes, you can start making money as soon as you enroll other members and have them sell products or services. 

I 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 kind of 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 depends on your preferences.

P.S: I think affiliate marketing is one of the best business models out there, and you shouldn't have to pay to join programs to work with them.

My Reasoning That Affiliate Marketing Is Not A Pyramid Scheme

After years of trying different side hustles and even getting scammed by online business opportunities, I've learned that affiliate marketing is a legitimate way to start a business.

I also know that some people ruin the name of affiliate marketing and will sell you the dream. This could be through illegal activities and fake products that need to be fixed.

Here's my recent monthly revenue sheet this year:

PartnerStack aff rev EddyBalle

I've stuck through the basics and done it the right way. Here are a few things I did to make it work without faking it to the top:

  • Pick a micro niche
  • Build an actual website that works
  • Do SEO and video content
  • Start getting trickles of organic traffic on both platforms
  • Reply to all comments and grow a target audience that believes in you
  • Build relationships with real people
  • Rinse & Repeat

Don't just focus on getting sales but on the user's problem. Once you understand, then you know you can make affiliate marketing work.

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 much more 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 affiliate networks and companies to choose from, so you can find products and services 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.

Are there Affiliate Marketing Scams I Should Look Out For?

As with many business models that offer you the opportunity to make a good income, there are some things to look out for to avoid affiliate marketing scams.

1. Promises of Easy Money

One of the most common affiliate marketing scams is promising easy money. Many scammers will claim that you can make much money quickly and with little effort by becoming an affiliate marketer.

However, affiliate marketing takes a lot of work and is not a get-rich-quick scheme. If you see an offer that promises easy money, it is likely a scam.

2. Upfront Costs

Another common scam is charging upfront costs. Some scammers claim you need to pay for a “starter kit” or another product to become an affiliate marketer.

However, affiliate marketers should never have to pay to join an affiliate program. If you see an offer that requires upfront payment, it is likely a scam.

3. Training Programs

Some scammers will also offer training programs that promise to teach you how to be a successful affiliate marketer.

However, these programs are often useless and do not provide the information they claim to offer. Additionally, many of these programs are very expensive, so you would be wasting your hard-earned money even if they provided useful information.

Don't let this prevent you from joining a reputable course on how to be a successful affiliate marketer. Make sure you do your homework before joining and pay close attention to the negative reviews.

4. Guarantees

Another common scam is offering guarantees. Many scammers claim that they can guarantee your success as an affiliate marketer or that their program will make you money.

However, there are no guarantees in affiliate marketing, and any program that claims otherwise is likely a scam.

5. Fake Testimonials

Many scammers use fake testimonials to try and sell their products or services. They will often create fake web pages or social media accounts with only positive reviews of their products or services to trick people into thinking they are legitimate. 

That's why real businesses use video testimonials software to collect and track legitimate reviews.

How Do I Know if the Affiliate Program I Join is Legit?

If you are asking the question, "Is Affiliate marketing a pyramid scheme"? You may want to know how to tell if an affiliate marketing program is legit. Here are some tips:

1. Check the company's Better Business Bureau rating.

The Better Business Bureau is a nonprofit organization that rates businesses based on customer satisfaction and tries to protect consumers from scams.

Legendary Marketer BBB

A company with a high rating with the BBB will likely have a reputable affiliate program.

2. Read reviews of the company online.

Another way to research a company's legitimacy is to read reviews online. If other people have had positive experiences with the company, then it's likely that their affiliate program is also legitimate.

3. Look for red flags on the company's website.

Some red flags can indicate that an affiliate marketing program is not legitimate. For example, if the website promises unrealistic earnings or requires you to pay to join the program, likely, the program is not legitimate.

4. Contact The Company Directly And Ask Questions About Its Affiliate Program.

If you're unsure whether a company's affiliate program is legitimate, you can always contact the company directly and ask them questions about their program.

The affiliate manager should be quick to response and provide you with all the answers to your questions.

If they're unable to answer your questions or seem evasive, then it's likely that their affiliate program is not legitimate.

5. Read the terms and conditions

Once you’ve done your research and are ready to sign up for an affiliate program, read the terms and conditions carefully.

This document will outline the company's and affiliate marketers' rights and responsibilities, so you must understand it before agreeing.

Most affiliate programs are legitimate, but you'll need to use your best judgment when deciding whether an affiliate is right for you. If something doesn't feel right, it's probably not worth your time and effort.

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!