Is the five-level and three-level system a pyramid scheme?

The mode of five-level and three-order system is not only the isosceles trapezoid exit system, but also suspected of pyramid selling. MLM can be simply summarized as:

1. Registration fee is required.

2. Need to develop downline. It is necessary to constantly find collaborators to induce others to double their income under the guise of forming a team.

3. According to the following number of people and their business performance, decide how much return you have.

The five-level and three-order system was first implemented by Taiwan Province Xingtian Enterprise Co., Ltd., whose "Shuang Ankang Aerobic Health Swing Machine" used for pyramid selling was spread all over the country in the same year, and hundreds of millions of Taiwan dollars were swept away from the mainland through about 15 agents. Xintian company soon went bankrupt. But the five-level ternary system has been widely popular. The five-level and three-level system, referred to as the "five-three system" for short, is the most commonly used bonus distribution system in illegal pyramid schemes in China. MLM personnel advocate that this system is the most humanized direct selling system in the world, the fairest and most suitable for everyone to join, and it is suspected of pyramid selling.

Legal basis:

Prohibition of MLM regulations

Article 7 The following acts belong to pyramid selling:

(1) The organizer or operator, through the development of personnel, requires the developed personnel to develop other personnel to join, 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 business operator, through the development personnel, requires the developed personnel to pay the fees or pay the fees in disguised form by subscribing for commodities, etc. , so as to obtain the qualification to join or develop other personnel to join and seek illegal interests;

(3) The organizer or business operator requires the developed personnel to develop other personnel to join, thus forming an online relationship, and calculating and paying online rewards according to the sales performance of offline personnel to seek illegal benefits.

Article 8 The administrative department for industry and commerce shall, in accordance with the provisions of these regulations, be responsible for investigating and handling pyramid schemes as stipulated in Article 7 of these regulations.