Article 2. MLM refers to the behavior that organizers or managers develop personnel to calculate and pay remuneration to the developed personnel on the basis of the number of personnel or sales performance directly or indirectly developed by them, or to require the developed personnel to obtain the qualification to join on the condition of paying a certain fee, thus disrupting the economic order and affecting social stability.
Article 7 The following acts belong to pyramid selling:
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, through the development personnel, requires the developed personnel to pay the fees or pay the fees in disguised form by subscribing for commodities. , and 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.
In the MLM Prohibition Ordinance, the concept of hierarchical relationship has been repeatedly mentioned. The formation of hierarchical relations according to certain laws is only a phenomenon in many pyramid schemes, and it is only possible to be suspected of pyramid schemes if it is related to illegal possession of other people's property.
Extended data:
Measures and procedures for investigating pyramid schemes:
Chapter III Regulations on Prohibition of MLM Article 14 The administrative department for industry and commerce at or above the county level may take the following measures when investigating suspected pyramid selling activities:
1, ordered to stop related activities;
2. Investigate the organizers, operators and individuals suspected of pyramid schemes to understand the relevant situation;
3. Enter the business premises and training, assembly and other activities places suspected of pyramid schemes for on-site inspection;
4. Consult, copy, seal up and detain relevant contracts, bills, account books and other materials suspected of pyramid schemes;
5. Seal up and detain products (commodities), tools, equipment, raw materials and other property suspected of being specially used for pyramid schemes;
6. Seal up the business premises suspected of pyramid selling;
7. Inquire about the accounts of the organizers or operators suspected of pyramid schemes, as well as accounting vouchers, account books and statements related to deposits;
8. If there is evidence to prove that illegal funds are transferred or hidden, they may apply to judicial organs for freezing.
When the administrative department for industry and commerce takes the measures specified in the preceding paragraph, it shall report in writing or orally to the principal responsible person of the administrative department for industry and commerce at or above the county level and obtain approval. If the situation is urgent and it is necessary to take the measures specified in the preceding paragraph on the spot, it shall be reported immediately afterwards and relevant procedures shall be handled; Among them, the implementation of the seizure and detention as stipulated in the preceding paragraph and the measures specified in items (7) and (8) shall be approved in writing by the principal person in charge of the administrative department for industry and commerce at or above the county level in advance.
References:
Central People's Government of People's Republic of China (PRC)-Prohibition of MLM Regulations