I want to launch a program but i am afraid if it is ponzi scheme. I will give a little description about this program here. Actually, people need to signup for a program and then they will be paid according to their activity. The problem is, the ROI is very tiny. So an active downline is necessary to earn a substantial amount. If i market the individual program not many will come. But if i claim an earning of $200-$300 per month then it might be wrong because it will be based on downline income. So there is income on individual signup but not good untill the downline is built. My scheme signs up people for individual program and then builds downline for them. For this i don't charge anything. But they will have to spend on advertising. Will this be called a ponzi scheme. I am really confused.
You can say that again. It's better than watching the FBI walk into your office or home as they come to arrest you.
IANAL, so I can't really comment on your business idea directly, but you probably should read what the FTC has to say. First read the rules for marketing on the internet, with special focus on the MultiLevel Marketing (MLM) section: http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.htm Take note of what they warn consumers to watch out for in MLMs - does this sound like your business? http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.htm Read all the other information the FTC hase for businesses and consumers about "franchising and business opportunities". http://www.ftc.gov/bcp/menu-fran.htm Read and understand 16 CFR 436 http://www.ftc.gov/bcp/franchise/16cfr436.htm Then, read this speech about pyramids and ponzi schemes - do you recognize your business? http://www.ftc.gov/speeches/other/dvimf16.htm Once you've read all that, and you still think your business plan is legal, consult with an attorney.
Thank you so much for this reply I think my program is legal because i am just trying to build an affiliate downline. This is an establihed business which pays affiliate commission for bringing new users and does not depend on affiliates to pay commsions to the affiliates. I am just trying to leverage on affiliate commisions by providing a framework of a system so that i am able to bring more affilates under me in that and couple of other programs. Once again thank you for providing me the link to useful information.
Why would you invest your time in a business like this if you have any of the questions you have? I would stay away from this program if I were you, and if you are seriously considering it, seek an experienced lawyer that has a lot of experience in this.