This is a matter of actual written contract
. This means that as long as your contract with your members states that the subscription is used in this manner, it is a legal contract. This is an incentive program to encourage members to sign up new members, so it is not a pyramid type scheme where people are told if they invest they will get money for others who invest, you are actually providing a service, so it is a right to contract for this type of service and payment plan.
There are no real legal guidelines, but you can read about Ponzi Schemes
and Pyramid Schemes
to see that what you are doing in offering a legitimate service would not fall under that type of scheme. Also see: Pyramid MLM Schemes
Outside of something that is illegal, parties are free to contract as they see fit and here if they contract with you under the understanding they will receive payment for anyone they sign up as an incentive to get people to join the service it would be legal.
I truly aim to please you as a customer, but please keep in mind that I do not know what you already know or don't know, or with what you need help, unless you tell me. Please consider that I am answering the question or question that is posed in your posting based upon my reading of your post and sometimes misunderstandings can occur. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered.
If you did not get all of the information you may have wanted PLEASE USE THE REPLY TO EXPERT LINK IF YOU HAVE FOLLOW UP QUESTIONS AND NOT THE FEEDBACK BUTTON FOR BAD SERVICE. PLEASE CLICK ON “OK,” “GOOD” or “EXCELLENT” SERVICE. Kindly remember to ONLY rate my answer when you are fully satisfied. If you feel the need to rate anything less than OK, please stop and reply to me via the or REPLY TO EXPERT button with whatever issue or clarification you may need.
Also remember, sometimes the law does not support what we want it to support, but that is not the fault of the person answering the question, so please be courteous.
PLEASE NOTE WELL WE ARE DEALING WITH LAWS OF 50 STATES PLUS FEDERAL LAWS, AS WELL AS DEALING WITH OTHER CUSTOMERS, SO PLEASE BE PATIENT AND BE ASSURED YOU ARE NOT BEING IGNORED.
There can also be a delay of an hour or more in between my answers because I may be helping other customers or taking a break.
You can always request me through my profile at http://www.justanswer.com/law/expert-paulmjd/ or beginning your question with “For PaulMJD…”