Chapter 4Internet MULTI-LEVEL SERVICEMARKET⦁What are the differences between multi level marketing and direct personal sale?It seems that multi level marketing (MLM), netwrok marketing and direct sellers scheme marketing which are under the pyramid retail sales criterion. It means only third parties with no connection to the selling organizations are considered legitimate "ultimate users". Consequently, it deems the consumption of product by distributors (participants), "internal consumption" to be illegalitimate and simply a cover for fraud.As multi level marketing or direct sellers from pyramid schemes both marketing which need individual participant or distributor who give money to buy their products to join to whose business to earn commissions. It seems the participant or distributor will be client role more than member or business partnership role. So, it seems MLM or direct sellers from pyramid schemes which main income sources are come from participants or distributors ( internal clients). Rather, the key question is to determine whether the purchasers, whoever who may be actually resell or consume their products if the sales transactions are thus reveals to legitimate, as a matter of economic principle. They are also revealised to have increased social welfare. By accepting and adopting without further inquiry the "retail sales criterion", even though it is contrary to basic principles of economics and logic. Consequently, I shall indicate these above proposed test to distinguish legitimate from fraudulent enterprise of legitimacy to multi level marketing or pyramid schemes direct sellers both sale channels.The reasons of legitimacy to multi level marketing or pyramid schemes direct sellers include which are inappropriately not just the consumer surplus flowing from, but also the profits that the parent firm earns from selling products to dustributors for their internal consumption. This error is caused by asserting that the resulting biased estimates of cash flow are sufficient to indicate that either a pyramid scheme (multi level or direct personal sale) is in progress. These both network sale channels discard all profits earned with internal consumption and because they assume, without the justificaton or validation, that all participants ( distributors) in a direct selling enterprise act to as to maximize their cash income. What is the mean of relating high rate at which individuals are to direct selling is sufficient to be defrauded. It is alternative explanations for the rate at which individuals quit direct selling ( the "quit rate"), and it provides no economic analysis or inquiry as to the quit rate those distributors might exhibit outside direct selling. It implies the quit rate of distributors in either direct selling or multi level (network) enterprise is pyramid scheme comparable to what one might observe in the counter-factual in which those individuals are employed as wage labour.As the accounting theory view, pyramid multi level marketing fraud is considered of circumstances unrelated to pyramid fraud, such as calculations of distributors (participants) income whether a parent company's current cash outflows are fully funded by inflows. More direct personal sale or phyramid theme sale business calculations in this regard are biased toward finding fraud because which discard all profits earned with internal consumption and because which assume without theoretical justification or validation that all participants in a direct selling enterprise act as to maximize their cash income. Alternative explanation for the rate at which individuals quite direct selling the quit-rate and provides no economic analysis might exhibit outside direct selling. In fact, a high rate is sufficient to conclude that distributors (participants) were defrauded is apparent upon noting that there are also high quit-rates in other undeniably legitimate businesses.