While MLMs focus almost exclusively on direct selling, this is not an accurate synonym because direct selling is simply the method by which distributors in MLMs sell products and/or recruit new members. Direct selling is the idea that sales people leverage their personal contacts and relationships, whereas salesmen at a normal company are often working with people that they don’t personally know. Multi-level marketing companies that have lasted many years or even decades have generally done a better job of emphasizing direct sales over recruiting.

In 1979, a landmark ruling involving Amway helped to legitimize the multi-level marketing industry. The FTC found that Amway was not operating as a pyramid scheme according to the strict statutory definition of one, but did order the company to stop deceiving its distributors about their income potential.