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Michael
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Hi! I want to start a residual income business where people

Customer Question

Hi! I want to start a residual income business where people pay $100 monthly registration to join my business and earn a $50 referral bonus every month for every person they bring into the business as long as that person is in the business. Is that legal? Can illegal aliens join the business? What are all the steps to start that business? Thank you for your time and have a great day!
Submitted: 2 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 2 years ago.

bizlaw :

What is the nature of the business you want people to engage in?

Customer: Whoever joins has to search for people
Customer: Everybody will make an extra income by referring people to the business and getting paid a $50 commission for every referral from the $100 monthly subscription that everybody will pay as long as they are in the business.
Customer: Our mission will be to get people out of this financial crisis
Expert:  Michael replied 2 years ago.
Hi there, my name is XXXXX XXXXX I'm a business law attorney with experience in all aspects of business law. I'll do my best to assist you.

That is called a Pyramid Scheme or Ponzi Scheme and it is quite illegal most countries. There is no value added and they inevitably fail when they reach a certain critical mass, leaving those at the end with a loss. They've been around for over a century. Most people hide the fact that it's a Pyramid Scheme and don't get caught for little while. The fact that you're advertising it means you'd likely be prosecuted very quickly.

http://en.wikipedia.org/wiki/Pyramid_scheme
Customer: replied 2 years ago.
What if i put up a membership website and give a referral fee for each referral to my website? Can it be a recurring bonus as long as the member pays the membership? That is legal right?
Expert:  Michael replied 2 years ago.
Read the link I provided about Pyramid Schemes. A website, or club, or group, or organization, etc. doesn't change anything. In the end it's nothing more than a pyramid of people paying that will have to eventually end with a massive loss for countless people. Usually it's disguised as investments or something rather than blatantly stating it's a pyramid (think Bernie Madoff), or at least tiered value (a lessening percentage at each level of the pyramid). After all, in your pyramid scheme, what's the incentive to give you $50 rather than just keep the whole $100 for themselves? Thinking of it that way shows just how untenable it is.

However it's all illegal. Any form of simply taking new participant's money and giving it to old participants while taking a cut for yourself is a Pyramid Scheme and quite illegal in the US.
Michael, Attorney
Category: Business Law
Satisfied Customers: 58
Experience: Experienced Business Lawyer
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