They just have a chance (if they sign up to be distributors) to also make money if they ever decide to sell. And OF COURSE you make more money by recruiting more customers.

And OF COURSE you make more money by recruiting recruiters too— because they then also recruit more customers and you get to leverage their efforts at doing so.

The ONLY reason that is a problem is if no one is actually consuming the product. As long as there are people at the “bottom” who are consuming it is perfectly legitimate, and it remains perfectly legitimate regardless of whether the consumers at the bottom signed up as “distributors” to get a discount or not.

The essence of MLM is that your very best customers also decide to sell. You can’t decide arbitrarily that they are sellers and only sellers and that their purchases don’t count as consumer purchases.