However, often an unscrupulous individual will run pyramid scheme cleverly disguised as a legitimate MLM company irregardless of severe penalties. That's pretty stupid. The basic way to recognize a pyramid scheme is when there's a very large cost to join and there's a much lower value or even no product or service offered in return for this cost. Usually your sponsor is paid a large commission from your initial entry fee. A third way is when you see a product or service is offered with no perceived value except to those who are investing for the purpose of getting others to invest.
Marketing is a legitimate and credible business.
It's just like any other business though - the people running it make it credible and legitimate. There are various levels of government involved in regulating MLM as well as non-MLM businesses including Federal, State, and Local laws. Contrary to popular belief, Attorney Generals, the FTC, and other government authorities do not approve of any company's business plan. Even the FDA does not approve of a company's product unless it is considered a drug or medical device. The authorities only investigate complaints and enforce laws governing companies in their jurisdiction.