Joel, that’s a great question. Basically, a tiered affiliate system is multi-level marketing or network marketing system. The effect is you as a business owner pay a percentage or whatever you set up as your commission structure to your affiliates. Nothing wrong with this so far … Amazon.com has an affiliate system.
Here’s where it gets to be multi-level marketing. You, the affiliate, get commissions off sales from affiliates who signed up under you and under affiliates signed up on them. One shopping cart does this at 5-tiers.
Depending upon some laws in various States, the tiered affiliate system could be considered illegal. Before getting into this marketing model investigate, with your business attorney, any possible legal problems you may encounter as an affiliate. There’s nothing worse than developing your business to end up having to go out of business because of an affiliate issue.