Based on the Regulations on the Prohibition of Distribution:
Article 2, pyramid selling, refers to the organizer or operator to develop people, through the development of people to develop the number of people directly or indirectly developed or sales performance as the basis for calculating and paying compensation, or require the development of people in order to pay a certain amount of money as a condition to obtain qualifications to join the way to obtain illegal benefits, disturb the economic order, affect social stability, and so on. Behavior that affects social stability.
Article 7
The following acts belong to pyramid schemes:
(1) The organizer or operator, through the development of personnel, requires the personnel to be developed to develop other people to join, and calculates and pays remuneration (including material incentives and other economic benefits, hereinafter the same) to the developed people on the basis of the number of people developed directly or indirectly by rolling up the development of people to make illegal profits;
(2) The organizer or operator, through the development of personnel, requires the personnel being developed to pay fees or subscribe to commodities and other means of payment in disguise, to obtain the qualification of joining or developing other people to join, and profiting from illegal benefits;
(3) The organizer or operator, through the development of personnel, requires the personnel being developed to develop other people to join, forming an up-and-down line relationship, and (C) the organizer or operator, through the development of personnel, requiring the development of other people to join, forming a relationship between the upper and lower lines, and calculating and paying remuneration to the upper line on the basis of the sales performance of the lower line, and profiting from illegal profits.
In the "Regulations on the Prohibition of Distribution", repeatedly referred to the concept of hierarchical relationships, a certain regular composition of hierarchical relationships is only a phenomenon of many marketing, must be with the illegal possession of other people's property may be suspected of distribution.