The UK Legislative Context of Trading Schemes

What a trading standards office says!

Trading Schemes

However, trading schemes must comply with the provisions in Part XI of the Fair Trading Act as amended by the Trading Schemes Act 1996 and the Trading Schemes Regulations 1997.

Trading Schemes become illegitimate and illegal when, while purporting to trade in goods or services, their real purpose is to generate money by recruiting new participants.

This is often referred to as "pyramid selling" (but not all "pyramid" schemes are "pyramid selling"). Note that recruitment rewards are not in themselves unlawful. But it is unlawful to persuade someone that the main motive for joining a scheme is to profit from recruiting others or to take money from someone on the basis of such a motive.

The Department of Trade and Industry has issued a guidance booklet ''The Trading Scheme Guide'' which outlines the provisions of current legislation. It includes the following important questions for all potential participants to consider:

Do I understand what is being offered to me?

Do I know what I will have to pay?

Do I understand that this is a self-employment opportunity and earnings will depend on the market and my efforts?

Is there a demand for the products of the scheme and can I honestly recommend them to others?

While I have a legal right to a contract, do I understand that, if things goes wrong, it will be up to me to enforce my rights?

Am I prepared to take the risk?

Should I seek independent advice before joining? (Compliance with the legislation does not mean that a scheme is commercially viable. Potential participants should seek independent and professional advice.)

This information has been copied from the website of Trafford Metropolitan Borough Council Trading Standards and is acknowledged as their copyright.

You may find these links useful if you would like to look deeper into the seamy side of pyramids and the like!

MLM vs. Pyramid Schemes Scams
Are you under the impression that multilevel marketing plans are all Pyramid Schemes?

https://www.stopspam.org/faqs/mlm_vs_pyr.html

Pyramid Schemes
[For more information about Pyramid Schemes and fraudulent multilevel marketing programs
https://www.sec.gov/answers/pyramid.htm

Identifying Illegal Pyramid Schemes
By Jeffrey A. Babener ... Identifying Illegal Pyramid Schemes
https://www.mlmstartup.com/articles/b24ho.htm

Pyramid Schemes, Ponzi Schemes, and Other Frauds
Ponzi Schemes are similar to Pyramid Schemes, but differ in that Ponzi Schemes are operated by a central company or ...
https://www.impulse.net/~thebob/Pyramid.html

The Bottom Line About Multilevel Marketing Plans
... However, others are illegal Pyramid Schemes.
https://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.htm

Pyramid Schemes - What's wrong with chain letter pyramid schemes?
I If you post Pyramid Schemes and chain letters on the Internet, you can expect to lose money,
https://www.interleaves.org/~rteeter/pyramid.html

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Our Affiliate Sales Program's specifics page is probably a good place to continue!

You will find a lot more detailed information about our Program in the form of answers to frequently asked affiliate sales program questions in our FAQ page.

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