Truth: Pyramid schemes are illegal. Yes, there are pyramid schemes out there, but direct selling is a legitimate and legal way for entrepreneurial-minded people to build a business for themselves but not by themselves. The main difference in a legitimate direct selling company as compared to a pyramid scheme is how the company compensates its sales force. Direct selling companies compensate based on the sale of real products and services to real customers. A pyramid scheme compensates based on recruitment, and in most cases there is no real product and no actual customers are acquired.