Karen pays a fee [fees typically range from $99-$1000] to become a distributor for an MLM. The MLM works by having the people above (the person who recruited Karen) Karen [called a up-line] get a percentage of whatever Karen sells. Karen is encouraged not only to sell the product, but to sign up other people below her [called a down-line] so that Karen can make even more money.
In a Pyramid Scheme they promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.