MLM is an illegal business activity, which is career-oriented, means to attract people and aims at defrauding huge profits, that is, MLM.

At present, MLM organizations usually use the following models:

1. Off-site operation mode (big pot rice, dormitory, serial production, etc. ). (excluding: MLM institutions such as distance education, e-commerce, telephone cards, software, etc., most of which develop customers online, and some localized operation modes also appear)

2. The joining fee is mostly: 2800.2900.3800.3900.4200 (at present, the joining fee for distance education, e-commerce, telephone cards, etc.). The same is a few hundred yuan, and the initial shares of government projects as bait for illegal pyramid schemes, the franchise fee is as high as 60 thousand to 70 thousand per order).

3. The system is mainly a five-level third-order system (or isosceles trapezoid) and a double-track system.

4. The so-called "three commercial law" is widely publicized, and their operation modes are still very similar.

The difference between direct selling and pyramid selling;

1. Regular direct selling companies must be registered in the industrial and commercial bureau where the company is located (within the scope of Chinese mainland), with a registered capital of not less than 80 million yuan and 20 million yuan. However, illegal pyramid schemes do not exist, or they are engaged in illegal pyramid schemes under the banner of other legal companies. Of course, there are also some pyramid schemes in which local companies register a small traditional company or a fictitious registered company to increase their credibility.

2. Products: The products of regular direct selling companies are diversified, most of which are developed and produced by their own companies, and only a few are agents or not. Generally speaking, the products of MLM institutions are relatively simple, and most of them belong to three-no products. There are also many illegal pyramid schemes that borrow products from other well-known companies (however, their products are fake and shoddy). In recent years, some new forms of pyramid selling have emerged, such as distance education, fund-raising, government projects, online stores, original stocks and so on.

3. Formal education system Direct selling companies have a perfect education system and a team of education experts and lecturers, while MLM institutions only have training organized by team members.

4. Direct sellers of regular direct selling companies must have their own service outlets (company offices, branches or specialty stores) in provinces and cities engaged in direct selling activities, while MLM institutions do not.

5. Whether there is a perfect return system.

legal ground

Criminal law of the people's Republic of China

Article 224 The crime of contract fraud, under any of the following circumstances, defrauds the other party of property for the purpose of illegal possession in the process of signing and performing the contract, and if the amount is relatively large, it shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also or only be fined; If the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years and shall also be fined; If the amount is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment, and shall also be fined or confiscated:

(1) Signing a contract in the name of a fictitious unit or others;

(2) Mortgaging with forged, altered or invalid bills or other false property rights certificates;

(three) to perform a small contract or part of the contract first, to deceive the other party to continue to sign and perform the contract, and to have no actual performance ability;

(4) After receiving the payment for goods, advance payment or secured property paid by the other party;

(5) defrauding the other party's property by other means.

Article 224-1 Whoever organizes and leads pyramid selling activities, in the name of selling goods and providing services, requires participants to obtain the qualification to join, forms a hierarchy in a certain order, and directly or indirectly lures or coerces participants to continue developing pyramid selling activities that others participate in, defrauding property and disrupting economic and social order, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also be fined; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and fined.