According to the provisions of the MLM Ban:
Article 2. MLM refers to the behavior that organizers or managers develop personnel to calculate and pay remuneration to the developed personnel on the basis of the number of personnel or sales performance directly or indirectly developed by them, or to require the developed personnel to obtain the qualification to join on the condition of paying a certain fee, thus disrupting the economic order and affecting social stability.
Article 7
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 business operator requires the developed personnel to develop other personnel to join, thus forming an online relationship, and calculating and paying online rewards according to the sales performance of offline personnel to seek illegal benefits.
In the MLM Prohibition Ordinance, the concept of hierarchical relationship has been repeatedly mentioned. The formation of hierarchical relations according to certain laws is only a phenomenon in many pyramid schemes, and it is only possible to be suspected of pyramid schemes if it is related to illegal possession of other people's property.