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 based on 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.
The difference between direct selling and pyramid selling is that pyramid selling is not supported by products produced by factories, but by attracting people to profit from it. Direct selling, in general, is to use the product by yourself, feel that the product is good, share it with people around you by sharing, and get company rewards from it.
The return is to save a lot of store costs and advertising costs from this marketing model, and spread it in the form of WOM. Therefore, a good direct selling company must have convincing product support.
Extended data
The following acts belong to pyramid schemes:
1. The organizer or operator requires the developed personnel to join other personnel through the development of personnel, 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 operator requires the developed personnel to pay the fees through the development personnel, or pays the fees in disguised form by subscribing for commodities. , so as to obtain the qualification to join or develop other personnel to join, and seek illegal interests.
3. The organizer or operator, through the development of personnel, requires the developed personnel to develop other personnel to join, thus forming a relationship between the upper and lower levels, and calculating and paying online rewards based on the sales performance of the lower line 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.
Baidu Encyclopedia-Provisions on Prohibiting MLM