Question
Is this a pyramid scheme?
What to do next:
- Ask for the compensation plan and income disclosure in writing.
- Ask how customer sales are verified.
- Step away from the label debate until you have the documents.
Why this matters
The FTC explains that MLM analysis is fact-specific and depends on how the plan works, what it rewards, and whether compensation is tied to real sales to ultimate users.
For a pressured person, the most useful next step is to ask for written facts: the compensation plan, income disclosure, expense list, customer-sales information, and exit rules.
Questions to ask before joining
- How much compensation comes from retail customers who are not pursuing the opportunity?
- Can I earn meaningful net income without recruiting anyone?
- What do typical new participants keep after expenses?
Related recruiting phrases
Helpful next pages
- Someone pitched me an MLM. What should I do?
- Before You Join an MLM
- Before You Pay
- Documents to request before joining an MLM
- MLM expense worksheet
- Scripts you can use
Sources
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Regulator guidance
Multi-level Marketing Businesses and Pyramid Schemes
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Regulator guidance
Business Guidance Concerning Multi-Level Marketing