The FTC's business guidance on multi-level marketing identifies the structural question, and it is the only question that matters: is the compensation driven by retail sales to people outside the network, or by recruitment and by purchases made by participants themselves?
Everything else — the products, the culture, the testimonials — is downstream of that.
The detection protocol is arithmetic and it has to be performed before the first purchase, because after the first purchase you are inside chapter 310's mechanism.
Three checks.
Read the income disclosure statement. Most large MLMs publish one, usually as a PDF, usually linked in small type. Read the whole distribution rather than the headline. What you are looking for is the median participant's annual earnings, and whether the figures are stated before or after the cost of purchases, fees and events. In the published disclosures of most of these companies, the median is small and the figures are gross, which means the median participant is losing money.
Ask about retail. Specifically: what proportion of the company's revenue comes from sales to people who are not participants? If the answer is not available, or is met with an explanation about personal consumption, the structure is recruitment-driven.
And ask what happens to inventory you cannot sell, in writing. Buy-back terms, and the actual terms rather than the assurance.
The reason those questions have to be asked in advance is that the pattern afterwards is well documented. Effort justification means that once a participant has paid, dissonance pressure pushes them to believe in the opportunity, and — this is the cruel part — the failure is attributed internally. Not enough effort, not enough belief, not a big enough network. The structure is never the explanation offered, because the structure's validity is what the investment purchased.
The early signals during recruitment are recognizable. The opportunity is presented before the product. Income is illustrated by individual stories rather than by distributions. Your existing relationships are described as your market. There is pressure to buy inventory ahead of demand. Events cost money and attendance is framed as commitment. And your skepticism is characterized as a limiting belief.
The counter-response is to refuse inventory loading — buy nothing you have not already sold — and, if you have losses, to file with the FTC and your state attorney general. Chapters 269 and 270 are the settlements that came from exactly those complaints.
This counters Law 16.
Counters Law 16, Escalate Their Investment Until Retreat Is Unthinkable