illegal "pyramid scheme". Thats all you need to know. An illegal "pyramid scheme" is a form of multi-level marketing where the product or service is only of secondary importance, or there may be no product at all in the case of gifting or blessing scams. To join, you must pay some type of initial investment that gives you the right to recruit others into the company. For each person you bring into the company you receive money, or other bonuses or move closer to your big pay day Therefore, your earning potential depends primarily on how many people you sign up, not how much merchandise is sold.
Washington law declares the following practices illegal under the Anti-pyramid Promotional Schemes Act:
(1) No person may establish, promote, operate, or participate in any pyramid scheme.
(2) A limitation as to the number of persons who may participate, or the presence of additional conditions affecting eligibility for the opportunity to receive compensation under the scheme, does not change the identity of the scheme as a pyramid scheme.
(3) It is not a defense under chapter 65, Laws of 2006 that a person, on giving consideration, obtains goods, services, or intangible property in addition to the right to receive compensation, nor is it a defense to designate the consideration a gift, donation offering, or other word of similar meaning.
What is meant by an "investment"?
An investment includes any money paid to enter the venture. Though it may be called a "membership fee" or a "bookkeeping charge", the law still considers it to be an investment. And an inventory of products you must buy to resell is also considered an investment. Giving your time or talents, or buying demonstration samples at cost, are not considered investments.