Multi-level marketing (MLM), also known as Network Marketing is a business distribution model that allows a parent multi-level marketing company to market their products directly to consumers by means of relationship referral and direct selling… http://en.wikipedia.org/wiki/Multi-level_marketing
These systems foresee always an initial disbursement (the membership fee) by the user, a disbursement that feeds the gain of other users who have joined the system before this user. It then creates a circuit where the last joined pays for the first. Therefore there isn’t a value creation as any other productive activity but only a transfer of money into the hands of a few users: the firsts joined or the creators of the system. But not all MLM’s programs are scams, if the gains doesn’t are due to the initial membership fee of the subscribers but are from the sale of the product or of service claimed, then you may not suffer a damage.