Are all pyramid structures illegal if they involve recruiting/profit by membership?

[Ji33my]

I'm from Pennsylvania. I know pyramid schemes are illegal, but under what pretenses? From what I've read, its due to the fact that most are daeveloped under fraudulent circumstances. The lack of a product obviously is an issue, but those businesses were also mostly fraudulent.

I'm talking about a system where people pay for a membership fee to a forum, where they may have financial discussions. The membership fee is then distributed among other members. If you recruit two members you receive back your money, and then will constantly earn more money as they recruit more members. It will be strongly stressed and warned to new members coming in that if they are unable to recruit any members, they will not be able to refund their membership fee. Illegal? I'm extremely interested in the written code on this matter. I couldn't find anything online

 

[Zigner]

I'm from Pennsylvania. I know pyramid schemes are illegal, but under what pretenses? From what I've read, its due to the fact that most are daeveloped under fraudulent circumstances. The lack of a product obviously is an issue, but those businesses were also mostly fraudulent.

I'm talking about a system where people pay for a membership fee to a forum, where they may have financial discussions. The membership fee is then distributed among other members. If you recruit two members you receive back your money, and then will constantly earn more money as they recruit more members. It will be strongly stressed and warned to new members coming in that if they are unable to recruit any members, they will not be able to refund their membership fee. Illegal? I'm extremely interested in the written code on this matter. I couldn't find anything online

Are you seriously suggesting that you couldn't find information relating to pyramid schemes online?

Try this link: http://bit.ly/12naPdW

 

[Ji33my]

Thanks ! I found information on "chain distributor scheme", but this still doesn't fully assist me in my question of legality. People will be paying for membership to a club/forum. This forum will have a benefit to the members that allows them to get their membership fee back by recruiting at least 2 people, and then have a potential profit. They will also be stressed that if they fail to recruit anyone they will not be refunded. They still have the ability to be apart of the community since they paid for the membership. There are plenty of actual clubs out there they have high membership fees. If those clubs gave their members the ability to make their money back by finding more members, it's only a benefit really. Would those members of the club find it a scam? No, they joined the club to become a part of the club, making money is only a benefit that solely comes with it.

I would also have a disclosure agreement with the member before signing up, having them claim they are strictly signing up to be apart of the club/forum and their sole reason for being there isn't for potential monetary gain to be had.

 

[Zigner]

Review the link I gave you - there are, literally, thousands of places to get information contained in that link.

 

[Ji33my]

I'm currently doing some intensive reviewing of the webpages I've been given. I have found nothing in what I've read regarding specific legalities towards using new recruits to create a flow of money among members. Everything is pointing directly at fraudulent cases, so since there are no specifics within the laws regarding my situation, I want to assume its legal. I need to know this for sure though. I will keep looking but if I could receive some assistance that would be appreciated!

 

[Zigner]

I'm currently doing some intensive reviewing of the webpages I've been given. I have found nothing in what I've read regarding specific legalities towards using new recruits to create a flow of money among members. Everything is pointing directly at fraudulent cases, so since there are no specifics within the laws regarding my situation, I want to assume its legal. I need to know this for sure though. I will keep looking but if I could receive some assistance that would be appreciated!

I would suggest that you run your plan by a local attorney for guidance. A business attorney for now, but have a criminal attorney on standby also.

 

[Ji33my]

Alright thanks!

After reviewing one source, I did find this piece of information from Pennsylvania law.

section 2(4)(xiii) of the Unfair
Trade Practices and Consumer Protection Law, 73 P.S. Sec.
201-2(4)(xiii):
(4) "Unfair methods of competition" and "unfair or deceptive
acts or practices" mean any one or more of the following:
(xiii) Promoting or engaging in any plan by which goods or
services are sold to a person for a consideration and upon the
further consideration that the purchaser secure or attempt to secure
one or more persons likewise to join the said plan; each purchaser
to be given the right to secure money, goods or services depending
upon the number of persons joining the plan. In addition, promoting
or engaging in any plan, commonly known as or similar to the
so-called "Chain-Letter Plan" or "Pyramid Club."

From what I see, I am "engaged" in a plan to sell a service/good (the club). then the purchaser recruits people to join the club, or the "plan", and each purchaser, or member of the club is given a benefit within the club, or a right to secure money which increases dependent on the number of people recruited.....I can almost find no way around this law....

Every member will be knowledgeable of the consequences of the membership fee benefit....so I'm not understanding why it's illegal for people to make a risk at their own decision?.....