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CalAttorney2, Attorney
Category: Legal
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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Hello,Thank you for this service.I have an internet

Customer Question

Hello, Thank you for this service. I have an internet business I have verifiable products that have verifiable worth, as in they are really good and valuable to the majority. I have a payment system which allows income for my affiliates who choose to resell the program,  where new visitors who wish to buy my products can do so for a total of $28.00. This is a one time charge and there are no further payments required. The new visitor sees the four people in their "up line" or their four sponsors, and they pay each one of them $7.00 - thus the $28 one time cost of this program. I decided to NOT do this price point by credit card as typically a charge back or refund charge is $35.00 and many of my customers are hurting for money and this could drive their back account into the negative. So, I list the name and address of the sponsors to be paid right on the site and ask the new visitor to send a money order, a postal money order or a Western Union money order. To stress, I have REAL products, I've been online marketing since 1995 and am one of the people who actually make money online other than selling how to make money. My question is, am I doing anything illegal because I ask people to pay via money order and the mail? I am a licenced body guard, instructor for the joint terrorism task force, DHS... so you can imagine how I am not interested in breaking any laws for the obvious reason of, I'm not that person, AND - it would not be a great idea professionally either :- ) I will want to print your answer on my FAQ page...

Submitted: 4 years ago.
Category: Legal
Expert:  CalAttorney2 replied 4 years ago.
Dear Customer, thank you for using our service.

My name is Bill and I would like to assist you today. Please remember, that due to the nature of this forum, and the rules of the site, the information I am providing is "general legal information" and is not a specific legal analysis or opinion regarding your product or services. I believe that the information and references I can provide will be helpful to you in identifying the validity of your services, but I cannot make that determination for you, a local attorney that you retain for specific legal services, opinion, and instruction can.

A business selling legitimate products at a reasonable and market rate price, with a clear statement as to the reasonable profits or losses a customer can expect based on the purchase or sale of these products is conducting a legitimate business.

It is only when a company is engaged in false or deceitful behavior that the business becomes classified as a pyramid scheme or a ponzi scheme as opposed to legitimate multi-level marketing (almost always a bad idea as sales are often based on the sales of others), or some other form of legitimate sales business, where the customer is bringing in a reasonable amount of product to be sold, and can move that product expecting to make a profit within the stated range given a reasonable amount of effort (the company does not have to guarantee payment - the customer does have to put in the work, and sometimes customers simply have bad luck, but you need to have reasonable targets).

For assistance and definitions there are three primary websites and authorities for you and your potential customers to review in determining the validity of the services offered and to evaluate their interest in continuing with what you are selling.

Remember, I have no detailed information regarding your business, your website, or your services being offered, I am providing general legal information regarding this type of marketing plan and have provided three sites published by the Federal Government to assist your potential customers in evaluating whether or not they wish to engage your companies services.

I hope the above is helpful, if you have any questions please do not hesitate to let me know and I will follow up quickly.

Thank you for using our service, please do not forget to rate my answer when you are satisfied. I do wish you the best of luck in this matter.

Customer: replied 4 years ago.


Thank you for your reply.

it in no way helps me.

Your multiple reference of not being a true
legal answer and then providing a couple
of other facts, didn't help at all.

I want to know if my business model of
paying 4 levels of sponsors who resell
my products - and who accept pay by
money order via the mail is going to
get the the attorney general, sherrif,
post master or some other law enforcement
agency, knocking on my door.

My question is, can I conduct my business
legally or not?

That answer is the only one that is of any
value to me.

Thank you again.

All my very best,

Expert:  CalAttorney2 replied 4 years ago.
Hi Paul,

My apologies for not being very specific, we are not allowed to give specific legal opinions through this service. This stems from our inability to review all of the facts necessary to make a legal determination through an internet forum. In your case I am unsure as to what services or products you actually intend to sell, and I was hopeful the resources would allow you to develop that decision with a little more information than I have available on my end as the distinction between legitimate marketing plans and illegitimate pyramid or ponzi schemes is fact based.

However, I believe that your business model falls under the definition of a pyramid scheme or ponzi scheme. Any time that a new investor must pay multiple sponsors or investors ahead of them to join, so that newer investors can in return pay them, it carries this problem.

The mechanism of payment is immaterial.

If you are running a pyramid or ponzi scheme, you will be violating Federal laws.

I would be more than happy to follow up with any future questions you may have, and while my information must remain general as opposed to specific, I do want to give you as much legal information as possible to assist you in making your business venture work appropriately.