The main factors to determine whether it is a pyramid scheme are:

1. Participants pay a "capitation fee" or a "qualification fee" or subscribe for goods (including services) in a disguised form. "Fees" or "qualification fees" to obtain the qualifications to join and introduce others to join;

2. Develop downline personnel by introducing others to participate, and thereby establish an organizational system with internal wealth redistribution relationships between upper and lower levels;

3. The organizer uses part of the fees paid by participants to pay the remuneration of early participants to maintain operations; the income of participants is determined by the order in which they join and the number of development personnel.

Extended information

Feature identification

First of all, pie will not fall in the sky. When careers or returns are described in an exaggerated way, you should be wary of high returns. There are bound to be high risks.

Secondly, no matter how the form of MLM changes and develops, its essence is still to pay the entry fee by purchasing shares, developing downline personnel and recruiting people to form a hierarchy, and the "performance" of the downline personnel is used as the basis for profit.

Therefore, to identify MLM, you need to look at three characteristics:

1. Entry fee

Whether it is necessary to subscribe for goods or pay a fee to qualify to join or to recruit others to join Qualifications to seek illegal benefits;

2. Pulling people

Whether it is necessary to develop others to become one's downlines, and the number of people to be developed will be based on the number of people to be directly or indirectly developed on a rolling basis To seek illegal benefits based on the payment of remuneration;

3. Remuneration method

Whether remuneration is calculated based on the sales performance of direct or indirect development personnel to seek illegal benefits.

If you meet the above characteristics, you may be suspected of pyramid schemes

MLM disrupts the social and economic order, affects social stability and unity, causes an increase in social criminal cases, family destruction and other social unrest. The essence of MLM lies in the illegal transfer and aggregation of finances through the development of downlines, without creating social value. This is the essential difference between it and normal marketing. MLM is not a state act, nor can it be a state act. Although it has brought economic stimulation to the local area and promoted consumption, its organizational behavior has caused irreparable harm to most participants and violated normal human life and activities.

Reference: Baidu Encyclopedia: MLM