MLM refers to the way that organizers or managers develop personnel, calculate and pay remuneration to the developed personnel according to the number of directly or indirectly developed personnel or sales performance, or require the developed personnel to obtain the qualification for joining on the condition of paying a certain fee. Its purpose is to seek illegal interests, disrupt economic order and affect social stability.
Article 7 of the MLM Prohibition Ordinance clearly stipulates that the following acts belong to pyramid schemes:
(1) The organizer or operator, through the development of personnel, requires the developed personnel to develop other personnel to join, and calculates and pays remuneration (including material rewards and other economic benefits, the same below) to the developed personnel based on the number of personnel directly or indirectly developed, so as to seek illegal benefits;
(2) The organizer or business operator, through the development personnel, requires the developed personnel to pay the fees or pay the fees in disguised form by subscribing for commodities, etc. , so as to obtain the qualification to join or develop other personnel to join and seek illegal interests;
(3) The organizer or operator requires the developed personnel to join other personnel through the development personnel, thus forming an online relationship, and calculating and paying online rewards based on the sales performance of the offline line to seek illegal benefits.