MLM refers to the behavior that organizers or operators calculate and pay remuneration to the developed personnel based on their direct or indirect number of personnel or sales performance, or require the developed personnel to obtain the qualification to join on the condition of paying a certain fee, so as to seek illegal interests, disrupt economic order and affect social stability.
According to the provisions of Article 7 of the MLM Prohibition Ordinance of the State Council, 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.