Pyramid Scheme Questions
What is a pyramid scheme?A pyramid scheme is an act of multi-level marketing plan. The main characteristic of a pyramid scheme is that participants only make money by recruiting more members. The more people recruited, the higher the level you go on the pyramid. However, most of the time, the only way to make money is if you are on the top of the pyramid. In the majority of pyramid schemes, there are products to sell as well, but the products are usually hard to sell. There are many different kinds of pyramid schemes, but the two most basic are product-based and so-called naked pyramid schemes.
Is Melaleuca a pyramid scheme?Melacluca is a legitimate company that sells numerous products for the home and for personal wellness. However, your success with Melaleuca could depend on your personal capabilities and time and effort you put into the business. This is just one of the few multi-level marketing businesses that are run like a pyramid. Many times the legitimacy can be hard to spot.
Is a pyramid type business or lottery mailing business illegal in California?Pyramid or lottery based businesses are illegal in the state of California. According to Section 18 USC 1302 prohibits the mailing of materials for lotteries or other randomly based prize schemes. Pyramid schemes are totally different from lotteries. Essentially they are schemes in which payments by later participants are used to pay off the earlier participants. All such schemes eventually collapse due to the inability to recruit enough new participants to keep them going.
If someone is offering a product in return for a cash payment, but is following a pyramid type format, is this legal?A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered. It has been known to come under many guises. Pyramid schemes are illegal in many countries, including the United States.
Is it legal to send out letters asking people for a $1 to be put on a mailing list along with a note to be added to their mailing list?This type of action is normally considered an illegal pyramid scheme or illegal chain letters and may result, as the US Postal service is used, in a person committing federal mail fraud. A pyramid scheme is a scheme that requires others to join it so that money flows in to those already involved. Whether one asks to have their name added or whether one asks others to pay to be on such a list, the basic foundations of a chain letter/pyramid scheme are still in place and it will be illegal the same.
Pyramid schemes scam and pyramid fraud is taking place all over the world with many people trying to find new ways to make money. Before investing your money time and effort into a possible pyramid scheme, ask an Expert for legal insights based on the details of the particular scheme in question.