Pyramid Schemes / Multi-Level Marketing | State of California - Department of Justice

<!DOCTYPE html> <html lang="en" dir="ltr" prefix="og: http://ogp.me/ns# content: http://purl.org/rss/1.0/modules/content/ dc: http://purl.org/dc/terms/ foaf: http://xmlns.com/foaf/0.1/ rdfs: http://www.w3.org/2000/01/rdf-schema# sioc: http://rdfs.org/sioc/ns# sioct: http://rdfs.org/sioc/types# skos: http://www.w3.org/2004/02/skos/core# xsd: http://www.w3.org/2001/XMLSchema#"> <head> <link rel="profile" href="http://www.w3.org/1999/xhtml/vocab" /> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <meta http-equiv="Content-Type" content="text/html; charset=utf-8" /> <meta name="google-site-verification" content="xEmL-C4GwHUUV3xa5_meEBdRXothjohFP-peTjXSHtc" /> <link rel="shortcut icon" href="https://oag.ca.gov/sites/default/files/favicon_0.ico" type="image/vnd.microsoft.icon" /> <meta name="google-site-verification" content="rQ6oZQIxn_Jgp7Dq-sgruJW1gy830BKvtFSBNjqSw7A" /> <meta name="msvalidate.01" content="677D5153D29C8072A80042A74C837F58" /> <meta name="description" content="Millions of Americans have lost money in pyramid schemes. A pyramid scheme can take many forms, but generally involves the promise of making money by recruiting new people. Pyramid schemes are illegal, and most people lose money. Multi-level marketing programs, where participants sell products to the public and earn commissions both from their own sales and from the sales of" /> <meta name="generator" content="Drupal 7 (http://drupal.org)" /> <link rel="canonical" href="https://oag.ca.gov/consumers/general/pyramid_schemes" /> <link rel="shortlink" href="https://oag.ca.gov/node/22383" /> <meta property="og:site_name" content="State of California - Department of Justice - Office of the Attorney General" /> <meta property="og:type" content="article" /> <meta property="og:url" content="https://oag.ca.gov/consumers/general/pyramid_schemes" /> <meta property="og:title" content="Pyramid Schemes / Multi-Level Marketing" /> <meta property="og:description" content="Millions of Americans have lost money in pyramid schemes. A pyramid scheme can take many forms, but generally involves the promise of making money by recruiting new people. Pyramid schemes are illegal, and most people lose money. Multi-level marketing programs, where participants sell products to the public and earn commissions both from their own sales and from the sales of the people they recruit, can be a legitimate business using a network of independent distributors to sell consumer products. However, not all multi-level marketing programs are legitimate." /> <meta property="og:updated_time" content="2017-10-03T11:48:45-07:00" /> <meta property="og:image" content="https://oag.ca.gov/sites/default/files/oag-opengraph.jpg" /> <meta name="twitter:card" content="summary_large_image" /> <meta name="twitter:url" content="https://oag.ca.gov/consumers/general/pyramid_schemes" /> <meta name="twitter:title" content="Pyramid Schemes / Multi-Level Marketing" /> <meta name="twitter:description" content="Millions of Americans have lost money in pyramid schemes. A pyramid scheme can take many forms, but generally involves the promise of making money by recruiting new people. Pyramid schemes are" /> <meta name="twitter:image" content="https://oag.ca.gov/sites/default/files/oag-opengraph.jpg" /> <meta property="article:published_time" content="2012-02-10T15:05:11-08:00" /> <meta property="article:modified_time" content="2017-10-03T11:48:45-07:00" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon.png" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-72x72.png" sizes="72x72" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-76x76.png" sizes="76x76" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-114x114.png" sizes="114x114" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-120x120.png" sizes="120x120" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-144x144.png" sizes="144x144" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-152x152.png" sizes="152x152" /> <link rel="apple-touch-icon" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-180x180.png" sizes="180x180" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-57x57.png" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-72x72.png" sizes="72x72" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-76x76.png" sizes="76x76" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-114x114.png" sizes="114x114" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-120x120.png" sizes="120x120" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-144x144.png" sizes="144x144" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-152x152.png" sizes="152x152" /> <link rel="apple-touch-icon-precomposed" href="https://oag.ca.gov/sites/default/themes/custom2017/oag2017/img/apple-touch-icon-180x180.png" sizes="180x180" /> <title>Pyramid Schemes / Multi-Level Marketing | State of California - Department of Justice - Office of the Attorney General</title> <style> @import url("https://oag.ca.gov/modules/system/system.base.css?sndcgw"); </style> <style> @import url("https://oag.ca.gov/sites/default/modules/simplenews/simplenews.css?sndcgw"); @import url("https://oag.ca.gov/modules/field/theme/field.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/modules/logintoboggan/logintoboggan.css?sndcgw"); @import url("https://oag.ca.gov/modules/node/node.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/modules/calendar/css/calendar_multiday.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/modules/views/css/views.css?sndcgw"); </style> <style> @import url("https://oag.ca.gov/sites/default/modules/ctools/css/ctools.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/modules/wysiwyg_linebreaks/wysiwyg_linebreaks.css?sndcgw"); </style> <link type="text/css" rel="stylesheet" href="//maxcdn.bootstrapcdn.com/font-awesome/4.7.0/css/font-awesome.min.css" media="all" /> <link type="text/css" rel="stylesheet" href="//cdn.jsdelivr.net/bootstrap/3.3.7/css/bootstrap.css" media="all" /> <style> @import url("https://oag.ca.gov/sites/default/themes/contrib/bootstrap/css/3.3.7/overrides.min.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/themes/custom2017/oag2017/css/style.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/themes/custom2017/oag2017/css/overrides.css?sndcgw"); @import url("https://oag.ca.gov/sites/default/themes/custom2017/oag2017/css/yamm-mega-menu.css?sndcgw"); </style>   <script src="//code.jquery.com/jquery-1.9.1.min.js"></script> <script>window.jQuery || document.write("<script src='/sites/default/modules/jquery_update/replace/jquery/1.9/jquery.min.js'>\x3C/script>")</script> <script src="https://oag.ca.gov/misc/jquery-extend-3.4.0.js?v=1.9.1"></script> <script src="https://oag.ca.gov/misc/jquery-html-prefilter-3.5.0-backport.js?v=1.9.1"></script> <script src="https://oag.ca.gov/misc/jquery.once.js?v=1.2"></script> <script src="https://oag.ca.gov/misc/drupal.js?sndcgw"></script> <script src="//cdn.jsdelivr.net/bootstrap/3.3.7/js/bootstrap.js"></script> <script src="https://oag.ca.gov/sites/default/modules/spamspan/spamspan.js?sndcgw"></script> <script src="https://oag.ca.gov/sites/default/modules/google_analytics/googleanalytics.js?sndcgw"></script> <script src="https://www.googletagmanager.com/gtag/js?id=G-6SNZMLLM7F"></script> <script>window.dataLayer = window.dataLayer || [];function gtag(){dataLayer.push(arguments)};gtag("js", new Date());gtag("set", "developer_id.dMDhkMT", true);gtag("config", "G-6SNZMLLM7F", {"groups":"default"});</script> <script>jQuery.extend(Drupal.settings, {"basePath":"\/","pathPrefix":"","setHasJsCookie":0,"ajaxPageState":{"theme":"oag2017","theme_token":"h4Hc0hGUnja5H6zpWck7W13K_cPgAdkqsowMn7_s61I","js":{"sites\/default\/themes\/contrib\/bootstrap\/js\/bootstrap.js":1,"\/\/code.jquery.com\/jquery-1.9.1.min.js":1,"0":1,"misc\/jquery-extend-3.4.0.js":1,"misc\/jquery-html-prefilter-3.5.0-backport.js":1,"misc\/jquery.once.js":1,"misc\/drupal.js":1,"\/\/cdn.jsdelivr.net\/bootstrap\/3.3.7\/js\/bootstrap.js":1,"sites\/default\/modules\/spamspan\/spamspan.js":1,"sites\/default\/modules\/google_analytics\/googleanalytics.js":1,"https:\/\/www.googletagmanager.com\/gtag\/js?id=G-6SNZMLLM7F":1,"1":1},"css":{"modules\/system\/system.base.css":1,"sites\/default\/modules\/simplenews\/simplenews.css":1,"modules\/field\/theme\/field.css":1,"sites\/default\/modules\/logintoboggan\/logintoboggan.css":1,"modules\/node\/node.css":1,"sites\/default\/modules\/calendar\/css\/calendar_multiday.css":1,"sites\/default\/modules\/views\/css\/views.css":1,"sites\/default\/modules\/ctools\/css\/ctools.css":1,"sites\/default\/modules\/wysiwyg_linebreaks\/wysiwyg_linebreaks.css":1,"\/\/maxcdn.bootstrapcdn.com\/font-awesome\/4.7.0\/css\/font-awesome.min.css":1,"\/\/cdn.jsdelivr.net\/bootstrap\/3.3.7\/css\/bootstrap.css":1,"sites\/default\/themes\/contrib\/bootstrap\/css\/3.3.7\/overrides.min.css":1,"sites\/default\/themes\/custom2017\/oag2017\/css\/style.css":1,"sites\/default\/themes\/custom2017\/oag2017\/css\/overrides.css":1,"sites\/default\/themes\/custom2017\/oag2017\/css\/yamm-mega-menu.css":1}},"googleanalytics":{"account":["G-6SNZMLLM7F"],"trackOutbound":1,"trackMailto":1,"trackDownload":1,"trackDownloadExtensions":"7z|aac|arc|arj|asf|asx|avi|bin|csv|doc|exe|flv|gif|gz|gzip|hqx|jar|jpe?g|js|mp(2|3|4|e?g)|mov(ie)?|msi|msp|pdf|phps|png|ppt|qtm?|ra(m|r)?|sea|sit|tar|tgz|torrent|txt|wav|wma|wmv|wpd|xls|xml|z|zip|pdf|"},"bootstrap":{"anchorsFix":"0","anchorsSmoothScrolling":"0","formHasError":1,"popoverEnabled":1,"popoverOptions":{"animation":1,"html":0,"placement":"right","selector":"","trigger":"click","triggerAutoclose":1,"title":"","content":"","delay":0,"container":"body"},"tooltipEnabled":1,"tooltipOptions":{"animation":1,"html":0,"placement":"auto left","selector":"","trigger":"hover focus","delay":0,"container":"body"}}});</script> </head> <body class="html not-front not-logged-in one-sidebar sidebar-second page-node page-node- page-node-22383 node-type-page"> <div id="skip-link"> <a href="#main-content" class="element-invisible element-focusable">Skip to main content</a> </div> <header role="banner" id="page-header"> <div class="region region-header"> <div id="block-block-467" class="block block-block"> <div class="content"> <section id="ag-newsletter" class="container-fluid sect-separator" style="margin-bottom:1.5rem; border-bottom:0;"> <div class="container"> <div class="icon"><i class="fa fa-newspaper-o" aria-hidden="true"></i></div> <div class="title">Subscribe to Our Newsletter</div> <form action="https://public.govdelivery.com/accounts/CAOAG/subscribers/qualify" accept-charset="UTF-8" method="post"> <input type="hidden" name="utf8" value="✓" /> <input type="hidden" name="topic_id" id="topic_id" value="CAOAG_4" /> <div class="input-group"> <label class="sr-only" for="ag-weekly-newsletter">Subscribe</label> <input class="form-control form-subscribe" name="email" type="email" id="ag-weekly-newsletter" placeholder="Enter your email..."> <span class="input-group-btn"> <button name="commit" class="btn btn-info" type="submit" data-disable-with="Subscribe">Subscribe</button> </span> </div> </form> </div> </section> </div> </div><div id="block-block-370" class="block block-block"> <div class="content"> <div class="container"> <div class="row top-row"> <div class="col-xs-6 col-md-7"> <div class="universal-heading"> State <em>of</em> California Department <em>of</em> Justice </div> </div> <div class="col-xs-6 col-md-5"> <div class="social-network"> <a href="https://oag.ca.gov/news/feed" target="_blank" title="California Attorney General RSS Feed" aria-label="California Attorney General RSS Feed"><i class="fa fa-rss" aria-hidden="true"></i></a> <a href="https://www.facebook.com/AGRobBonta" target="_blank" title="California Attorney General Facebook" aria-label="California Attorney General Facebook"><i class="fa fa-facebook" aria-hidden="true"></i></a> <a href="https://twitter.com/AGRobBonta" target="_blank" title="California Attorney General Twitter" aria-label="California Attorney General Twitter"><i class="fa fa-twitter" aria-hidden="true"></i></a> <a href="https://www.instagram.com/AGRobBonta" target="_blank" title="California Attorney General Instagram" aria-label="California Attorney General Instagram"><i class="fa fa-instagram" aria-hidden="true"></i></a> <a href="https://www.youtube.com/user/caoag" target="_blank" title="California Attorney General YouTube" aria-label="California Attorney General YouTube"><i class="fa fa-youtube" aria-hidden="true"></i></a>  </div> </div> </div> <div class="row middle-row"> <div class="col-xs-12 col-md-6"> <div class="main-logo-container"> <a href="/"><img class="main-logo" src="/sites/default/themes/custom2017/oag2017/img/doj-seal-header.png" alt="Calfifornia Department of Justice - Office of the Attorney General"></a> </div> <div class="header"> <span>Rob Bonta</span> <br> <div class="header-separator"></div> <span class="title">Attorney General</span> </div> </div> <div class="col-xs-12- col-md-6"> <div class="form-group"> <form action="/search-results/" accept-charset="utf-8"> <div class="input-group desktopNavSearch"> <label class="sr-only" for="query-header">Search</label> <input class="form-control form-search" name="query" type="text" id="query-header"> <span class="input-group-btn"> <button class="btn btn-default form-submit" type="submit">Search</button> </span> </div> </form> <div class="form-group translate-header"> <a class="translate" data-toggle="modal" href="#siteTranslate">Translate Website | <span lang="es">Traducir Sitio Web</span></a> </div> </div> </div> </div> </div>  <div id="siteTranslate" class="modal fade bs-example-modal-lg" tabindex="-1" role="dialog" aria-labelledby="googleTranslate"> <div class="modal-dialog modal-lg" role="document"> <div class="modal-content"> <div class="modal-header"> <button type="button" class="close" data-dismiss="modal" aria-label="Close"><span aria-hidden="true">×</span></button> <h4 class="modal-title" id="googleTranslate">Google™ Translate Disclaimer</h4> </div> <div class="modal-body"> <p>This Google™ translation feature is provided for informational purposes only.</p> <p>The Office of the Attorney General is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool.</p> <p>Please consult with a translator for accuracy if you are relying on the translation or are using this site for official business.</p> <p>If you have any questions please contact: Bilingual Services Program at <a href="mailto:EERROffice@doj.ca.gov">EERROffice@doj.ca.gov</a></p> <p>A copy of this disclaimer can also be found on our <a href="/disclaimer">Disclaimer</a> page.</p> <h5>Select a Language Below / Seleccione el Idioma Abajo</h5> <div id="google_translate_element"></div> <script type="text/javascript"> function googleTranslateElementInit() { new google.translate.TranslateElement({pageLanguage: 'en', layout: google.translate.TranslateElement.InlineLayout.HORIZONTAL, multilanguagePage: true}, 'google_translate_element'); } </script> <script type="text/javascript" src="//translate.google.com/translate_a/element.js?cb=googleTranslateElementInit"></script> </div> <div class="modal-footer"> <button type="button" class="btn btn-default" data-dismiss="modal">Close</button> </div> </div> </div> </div> </div> </div> </div> </header>    <div class="region region-navigation"> <div id="block-block-371" class="block block-block"> <div class="content"> <nav class="navbar navbar-default yamm"> <div class="container"> <div class="navbar-header mobileNavSearch"> <form action="/search-results/" accept-charset="utf-8"> <div class="input-group"> <label class="sr-only" for="query-mobile">Search</label> <input class="form-control form-search" name="query" type="text" id="query-mobile"> <span class="input-group-btn"> <button class="btn btn-default form-submit" type="search" style="margin-left:0.5em;">Search</button> </span> </div> </form> <button type="button" class="navbar-toggle collapsed" data-toggle="collapse" data-target="#navbar-collapse" aria-expanded="false"> <span class="sr-only">Toggle navigation</span> <span class="icon-bar"></span> <span class="icon-bar"></span> <span class="icon-bar"></span> </button> </div> <div id="navbar-collapse" class="collapse navbar-collapse"> <ul class="nav navbar-nav mainNavbar"> <li class="dropdown"><a class="active-trail" href="/home">Home</a></li> <li class="dropdown yamm-fw"><a href="/about" class="dropdown-toggle" data-toggle="dropdown" id="accessible-menu-first-tier-1" aria-controls="accessible-menu-first-tier-2" aria-expanded="true">About</a> <ul class="dropdown-menu" id="accessible-menu-first-tier-2" aria-expanded="true" aria-hidden="false" aria-labelledby="accessible-menu-first-tier-1"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-3"> <ul class="subList"> <li><a href="/about"><img class="img-thumbnail" alt="Attorney General Rob Bonta" src="/sites/default/files/media/ag-bonta-official-2.jpg"></a></li> </ul> </div> <div class="col-md-3"> <h4>Who We Are</h4> <ul class="subList"> <li><a href="/about">About AG Rob Bonta</a></li> <li><a href="/office">About the Office of the Attorney General</a></li> <li><a href="/history">History of the Office</a></li> </ul> </div> <div class="col-md-3"> <h4>What We Do</h4> <ul class="subList"> <li><a href="/careers/aboutus/psle">Public Safety</a></li> <li><a href="/opinions">Opinions and Quo Warranto</a></li> <li><a href="/research">Research Advisory Panel</a></li> <li><a href="/research-center">Research Center</a></li> <li><a href="/children-seniors">Children & Families</a></li> <li><a href="/civil">Civil Rights</a></li> <li><a href="/consumers">Consumer Protection</a></li> <li><a href="/environment">Environment & Public Health</a></li> </ul> </div> <div class="col-md-3"> <h4>What We're Working On</h4> <ul class="subList"> <li><a href="/housing">Housing</a></li> <li><a href="/ogvp">Office of Gun Violence Prevention</a></li> <li><a href="/21st-century-policing">21st Century Policing</a></li> <li><a href="/economic">Consumer Protection and Economic Opportunity</a></li> <li><a href="/health-care">Health Care</a></li> <li><a href="/environment/justice">Environmental Justice</a></li> <li><a href="/equality">Equality</a></li> <li><a href="/immigrant">Immigration</a></li> <li><a href="/bcj">Children’s Rights</a></li> <li><a href="https://openjustice.doj.ca.gov/" target="_blank">OpenJustice</a></li> </ul> </div> </div> </div> </li> </ul> </li> <li class="dropdown"><a href="/media" class="dropdown-toggle" data-toggle="dropdown" id="accessible-menu-first-tier-3" aria-controls="accessible-menu-first-tier-4" aria-expanded="true">Media</a> <ul class="dropdown-menu" id="accessible-menu-first-tier-4" aria-expanded="true" aria-hidden="false" aria-labelledby="accessible-menu-first-tier-3"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-12"> <h4>Media Center</h4> <ul class="subList"> <li><a href="/media/news">Press Releases</a></li> <li><a href="/media/library">Media Library</a></li> </ul> </div> <div class="col-md-12"> <h4>Social Media</h4> <ul class="subList"> <li><a href="https://www.facebook.com/AGRobBonta" target="_blank" title="California Attorney General Facebook">Facebook</a></li> <li><a href="https://twitter.com/AGRobBonta" target="_blank" title="California Attorney General Twitter">Twitter</a></li> <li><a href="https://www.instagram.com/AGRobBonta" target="_blank" title="California Attorney General Instagram">Instagram</a></li> <li><a href="https://www.youtube.com/user/caoag" target="_blank" title="California Attorney General YouTube">YouTube</a></li> </ul> </div> </div> </div> </li> </ul> </li> <li class="dropdown yamm-fw"><a href="/careers" class="dropdown-toggle" data-toggle="dropdown">Careers</a> <ul class="dropdown-menu"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-3"> <h4>Career Opportunities</h4> <ul class="subList"> <li><a href="/careers/how-to-apply">How to Apply</a></li> <li><a href="/careers/exams">Assessments</a></li> <li><a href="/careers/job-vacancies">Job Vacancies</a></li> <li><a href="/careers/students">Internships & Student Positions</a></li> <li><a href="/special-agent-recruitment">Become a Special Agent</a></li> <li><a href="/dag-recruitment">Become a Deputy Attorney General</a></li> </ul> </div> <div class="col-md-3"> <h4>Organization of the Office</h4> <ul class="subList"> <li><a href="/careers/aboutus">About the Office</a></li> <li><a href="/careers/aboutus/legal">Legal Services Divisions</a></li> <li><a href="/law/dle">Division of Law Enforcement</a></li> <li><a href="/careers/descriptions/cjis">California Justice Information Services (CJIS)</a></li> <li><a href="/careers/aboutus/administration">Administration</a></li> </ul> </div> <div class="col-md-6"> <h4>AG Honors Program & Geoffrey Wright Solicitor General Fellowship</h4> <ul class="subList"> <li><a href="/careers/honors">Attorney General's Honors Program</a></li> <li><a href="/careers/osg-fellowship">Geoffrey Wright Solicitor General Fellowship</a></li> </ul> </div> </div> </div> </li> </ul> </li> <li class="dropdown"><a href="/regulations">Regulations</a> </li> <li class="dropdown yamm-fw"><a href="/services-info" class="dropdown-toggle" data-toggle="dropdown">Resources</a> <ul class="dropdown-menu"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-3"> <h4>For Businesses</h4> <ul class="subList"> <li><a href="/privacy/databreach/reporting">Submit Data Security Breach</a></li> <li><a href="/privacy/business-privacy">Privacy Resources</a></li> <li><a href="/hiddenfees">SB 478 - Hidden Fees</a></li> </ul> </div> <div class="col-md-3"> <h4>Service on the Attorney General</h4> <ul class="subList"> <li><a href="/services-info#locations">Office Locations / Status Updates</a></li> <li><a href="/services-info#require">Laws Requiring Service on the AG</a></li> </ul> </div> <div class="col-md-3"> <h4>Open Government</h4> <ul class="subList"> <li><a href="/government">Overview</a></li> <li><a href="/initiatives">Ballot Initiatives</a></li> <li><a href="/conflict-interest">Conflicts of Interest</a></li> <li><a href="/cjsc/aboutcjsc">Criminal Justice Statistics</a></li> <li><a href="/consumers/general/pra">Public Records</a></li> <li><a href="/publications">Publications</a></li> </ul> </div> <div class="col-md-3"> <h4>Grants</h4> <ul class="subList"> <li><a href="/grant-opportunities">Grant Opportunities</a></li> </ul> </div> </div> </div> </li> </ul> </li> <li class="dropdown yamm-fw"><a href="/programs" class="dropdown-toggle" data-toggle="dropdown">Programs</a> <ul class="dropdown-menu"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-3"> <h4>Programs</h4> <ul class="subList"> <li><a href="/programs">See All Programs</a></li> </ul> </div> <div class="col-md-3"> <h4>Most Popular</h4> <ul class="subList" > <li><a href="/charities">Charities</a></li> <li><a href="https://www.meganslaw.ca.gov" target="_blank">Megan's Law</a></li> <li><a href="/cures">CURES</a></li> <li><a href="/services-info">Service on the Attorney General</a></li> <li><a href="/dmfea">Division of Medi-Cal Fraud & Elder Abuse</a></li> </ul> </div> <div class="col-md-6"> <h4>  <span class="sr-only">Most Popular</span></h4> <ul class="subList"> <li><a href="/register">Permits & Registrations</a></li> <li><a href="/prop65">Prop 65 – Safe Drinking Water</a></li> <li><a href="/missing">Missing Persons</a></li> <li><a href="/privacy/databreach/reporting">Data Security Breach</a></li> <li><a href="/human-trafficking">Human Trafficking</a></li> </ul> </div> </div> </div> </li> </ul> </li> <li class="dropdown"><a href="/appointments">Appointments</a></li> <li class="dropdown"><a href="/contact" class="dropdown-toggle" data-toggle="dropdown">Contact</a> <ul class="dropdown-menu"> <li> <div class="yamm-content"> <div class="row"> <div class="col-md-12"> <ul class="subList"> <li><a href="/contact">Contact Us</a></li> <li><a href="/contact-espanol#googtrans(en|es)" class="sub notranslate">Contact Us - En español</a></li> <li><a href="/consumers/contact/espanol">Contáctenos/Formularios</a></li> <li><a href="/services-info">Service on the Attorney General</a></li> </ul> </div> </div> </div> </li> </ul> </li> </ul> </div> </div> </nav> <script> jQuery('ul.mainNavbar li.dropdown > a').on("keydown click", function(event) { var keycode = (event.keyCode ? event.keyCode : event.which); switch (keycode) { case 27: // 27 - escape key jQuery('ul.mainNavbar .dropdown-menu').hide(); jQuery(this).parent().removeClass('open'); jQuery(this).parent().find('.dropdown-menu').hide(); return false; case 1: // 1 - click case 13: // 13 - enter key var drop = jQuery(this).parent().find('.dropdown-menu'); if(jQuery(this).parent().hasClass("open") || drop.length == 0) { var href = jQuery(this).attr('href'); window.location.href = href; return; } jQuery('ul.mainNavbar .dropdown-menu').hide(); jQuery('ul.mainNavbar .dropdown.open').removeClass('open'); drop.show(); jQuery(this).parent().addClass('open'); return false; case 40: // 40 - down arrow key jQuery('ul.mainNavbar .dropdown-menu').hide(); jQuery('ul.mainNavbar .dropdown.open').removeClass('open'); jQuery(this).parent().find('.dropdown-menu').show(); jQuery(this).parent().addClass('open'); break; } }); jQuery('ul.mainNavbar li.dropdown').hover(function() { jQuery(this).find('.dropdown-menu').show(); jQuery(this).addClass('open'); }, function() { jQuery(this).find('.dropdown-menu').hide(); jQuery(this).removeClass('open'); }); </script> </div> </div> </div>   <div class="container-fluid"> <div class="row"> </div> </div> <div class="main-container container"> <div class="row"> <section class="col-sm-9"> <a id="main-content"></a> <h1 class="page-header">Pyramid Schemes / Multi-Level Marketing</h1> <ol class="breadcrumb"><li><a href="/">Home</a></li> <li><a href="/consumers" class="active-trail">Protecting Consumers</a></li> <li class="active">Pyramid Schemes / Multi-Level Marketing</li> </ol> <div class="region region-content"> <div id="block-system-main" class="block block-system"> <div class="content"> <div id="node-22383" class="node node-page clearfix" about="/consumers/general/pyramid_schemes" typeof="foaf:Document"> <span property="dc:title" content="Pyramid Schemes / Multi-Level Marketing" class="rdf-meta element-hidden"></span><span property="sioc:num_replies" content="0" datatype="xsd:integer" class="rdf-meta element-hidden"></span> <div class="content clearfix"> <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Millions of Americans have lost money in pyramid schemes. A pyramid scheme can take many forms, but generally involves the promise of making money by recruiting new people. Pyramid schemes are illegal, and most people lose money.</p> <p>Multi-level marketing programs, where participants sell products to the public and earn commissions both from their own sales and from the sales of the people they recruit, can be a legitimate business using a network of independent distributors to sell consumer products. However, not all multi-level marketing programs are legitimate. Some are illegal pyramid schemes in disguise. Be careful and ask questions before signing up.</p> <p><strong>If an opportunity has one or more of the following, it could be a pyramid scheme:</strong></p> <ul> <li>You make money mainly based on how many people you recruit and the money they pay to join, instead of through sales of products to the public. This is the number one sign of a pyramid scheme.</li> <li>There is a lot of pressure to sign up immediately. Scammers often use very carefully crafted scripts designed to lower your guard and get you excited about the business. Do your homework and ask a lot of questions before investing. A good opportunity to invest in a legitimate business will not disappear overnight.</li> <li>You are required to “buy-in” to join, or you have to spend money attending seminars or buying sales materials, especially if most products are sold to other distributors rather than to the public.</li> <li>You are required to purchase expensive inventory or a lot of inventory. While you must generally purchase items in a legitimate multi-level marketing program, if the business has a no-return policy or charges large “restocking fees,” it is a big red flag. If the business accepts returns, get the policy in writing. </li> </ul> <p><strong>And remember:</strong></p> <ul> <li>Just because your family and friends are participating, don’t assume an opportunity is legitimate. They may not know the business is an illegal pyramid scheme.</li> <li>A celebrity endorsement or member does not make the business legitimate.</li> <li>If it sounds too good to be true, it probably is!</li> </ul> <p>If you are considering buying into a multi-level marketing plan, ask a lot of questions and get details about the company and the products. Be careful about fraudulent marketing practices and potentially useless or unsafe products. Remember that your sponsor and others above your sponsor’s level will make money if you join—so take your time to make a smart, well-informed decision.</p> <p>You may find additional information about pyramid schemes and multi-level marketing from the <a href="https://www.consumer.ftc.gov/articles/0065-multilevel-marketing">Federal Trade Commission</a>, <a href="https://postalinspectors.uspis.gov/investigations/MailFraud/fraudschemes/employmentfraud/Marketing.aspx">U.S. Postal Inspection Service</a>, and <a href="https://www.sec.gov/oiea/investor-alerts-bulletins/investor-alerts-ia_pyramidhtm.html">Securities and Exchange Commission</a>.</p> <p>If you believe you were invited to join an illegal pyramid scheme, you may notify the consumer protection division of your local district attorney’s office, and file a complaint online with the Attorney General’s office by visiting <a href="https://oag.ca.gov/contact/consumer-complaint-against-business-or-company">https://oag.ca.gov/contact/consumer-complaint-against-business-or-company</a>.</p></div></div></div> </div> </div> </div> </div> </div>    </section> <aside class="col-sm-3" role="complementary"> <div class="region region-sidebar-second"> <div id="block-block-392" class="block block-block"> <div class="content"> <h4>Search Consumer Webpages</h4> <div class="form-group" style="margin: -1em 0 1em 0;"> <form action="/consumers/search-results" accept-charset="utf-8"> <div class="input-group"> <label class="sr-only" for="query-consumer">Search</label> <input class="form-control form-search" name="query" id="query-consumer" type="text"> <span class="input-group-btn"> <button class="btn btn-default form-submit" type="submit"><i class="fa fa-search" aria-hidden="true"></i><span class="sr-only">Search</span></button> </span> </div> </form> </div> </div> </div><div id="block-block-272" class="block block-block"> <div class="content"> <style> #report-complaint .panel-title { font-size: 1.2em; font-weight: normal; } .sidelinks li:last-child { margin-bottom: -1em; } .sidelinks a { width: 220px; border: 1px solid; margin-left: -1.3em; font-size: 0.8em !important; } </style> <div id="report-complaint" class="panel panel-info"> <div class="panel-heading">Report a Complaint</div> <div class="panel-body"> <p>Contact the Attorney General’s Public Inquiry Unit to report a complaint about a business or if you have questions or comments.</p> <ul class="nav-list sidelinks"> <li><a class="btn btn-info-reversed" href="/contact/consumer-complaint-against-business-or-company">Complaint Against Business</a></li> <li><a class="btn btn-info-reversed" href="/contact/general-contact-form">General Contact Form</a></li> <li><a class="btn btn-info-reversed" href="/consumers/contact/espanol">Contáctenos/Formularios</a></li>  </ul> </div> </div>  </div> </div><div id="block-block-393" class="block block-block"> <div class="content"> <style> #grants, #consumer-alert, #consumer-announcement { margin-bottom: 1em; } #grants .panel-title, #consumer-alert .panel-title, #consumer-announcement .panel-title, #additional-resoures .panel-title { font-size: 1.2em; font-weight: normal; } #consumer-alert .panel-body { color: #d83318; } </style> <div id="grants"> <div class="panel panel-info"> <div class="panel-heading"> <h2 class="panel-title">Grants</h2> </div> <div class="panel-body"> <p><a href="/consumers/emissions-fund">Automobile Emissions Research and Technology Fund</a></p> <p><a href="/consumers/YouthBeverageStudy">Youth Beverage Consumer Education and Research Fund</a></p> <p><a href="/consumers/sears-fund">Sears Fund for Consumer Protection and Education</a></p> </div> </div> </div> <div id="consumer-alert"> <div class="panel panel-danger"> <div class="panel-heading"> <h2 class="panel-title"><i class="fa fa-exclamation-triangle" aria-hidden="true"></i> Alerts</h2> </div> <div class="panel-body">  <div id="consumer-alerts"></div> <p><a href="/consumers/alerts"><strong>View All Alerts</strong></a></p> </div> </div> </div> <div id="consumer-announcement"> <div class="panel panel-warning"> <div class="panel-heading"> <h2 class="panel-title"><i class="fa fa-bullhorn" aria-hidden="true" style="padding-bottom: 1em; padding-top: 0.3em; width: 27px; float: left;"></i> Recent Consumer Actions</h2> </div> <div class="panel-body"> <p><a href="/Corinthian">Corinthian</a></p> <p><a href="/news/press-releases/attorney-general-kamala-d-harris-california-air-resources-board-announce-147">Volkswagen Diesel Emissions “Defeat Devices”</a></p> <p><a href="/legal-opinions/ag-mortgage-settlements">Mortgage Settlements</a></p> <p><a href="/consumers/actions"><strong>View More Actions</strong></a></p> </div> </div> </div> <div id="additional-resoures"> <div class="panel panel-info"> <div class="panel-heading"> <h2 class="panel-title">Additional Resources</h2> </div> <div class="panel-body"> <p><a href="/privacy/consumer-privacy-resources">Tips for protecting your privacy</a></p> <p><a href="http://www.dca.ca.gov/publications/legal_guides/m_1.shtml" target="_blank">Important consumer laws</a></p> <p><a href="http://leginfo.legislature.ca.gov/faces/codes.xhtml" target="_blank">Search California laws</a></p> <p><a href="http://uscode.house.gov/search/criteria.shtml" target="_blank">Search U.S. laws</a></p> <p><a href="/contact/faqs">More FAQs</a></p> </div> </div> </div> <script type="text/javascript"> jQuery(document).ready(function() { jQuery.get('/consumers/consumer-alerts', function (response) { var source = jQuery('' + response + ''); for (i = 1; i < 3; i++) { var alerts = source.find('#node-68690 li:nth-child('+ i +')').html(); alerts = '<div class="alert-item">' + alerts + '</div>'; jQuery(alerts).appendTo('#consumer-alerts'); } }); jQuery.get('/consumers/consumer-announcements', function (response) { var source = jQuery('' + response + ''); for (i = 1; i < 4; i++) { var announcements = source.find('#announcement-list li:nth-child('+ i +')').html(); announcements = '<div class="announcement-item">' + announcements + '</div>'; jQuery(announcements).appendTo('#consumer-announcements'); } }); }); </script> </div> </div> </div> </aside>  </div> </div> <footer class="footer container"> <div class="region region-footer"> <div id="block-block-373" class="block block-block"> <div class="content"> <div class="row hidden-print"> <div class="container sect-separator"> <div class="col-xs-12 col-md-1"> <img class="footer-seal" src="/sites/default/themes/custom2017/oag2017/img/seal.png" alt="State of California Department of Justice - Office of the Attorney General" /> </div> <div class="col-xs-12 col-md-5"> <div class="office">State of California Department of Justice <br> Office of the Attorney General</div> </div> <div class="col-xs-12 col-md-6"> <div class="form-group"> <form action="/search-results/" accept-charset="utf-8"> <div class="input-group"> <label class="sr-only" for="query-footer">Search</label> <input class="form-control form-search" name="query" type="text" id="query-footer"> <span class="input-group-btn"> <button class="btn btn-default form-submit" type="submit">Search</button> </span> </div> </form> </div> </div> </div> </div> <div class="row hidden-print"> <div class="container sect-separator">  <div class="col-xs-12 col-md-3"> <p class="heading"><a href="/office"> WHO WE ARE </a></p> <ul class="nav"> <li><a href="/about">About AG Rob Bonta</a></li> <li><a href="/history">History of the Office</a></li> <li><a href="/careers/aboutus">Organization of the Office</a></li> </ul> <p class="heading">WHAT WE DO</p> <ul class="nav"> <li><a href="/careers/aboutus/psle">Public Safety</a></li> <li><a href="/opinions">Opinions and Quo Warranto</a></li> <li><a href="/research">Research</a></li> <li><a href="/children-seniors">Children & Families</a></li> <li><a href="/civil">Civil Rights</a></li> <li><a href="/consumers">Consumer Protection</a></li> <li><a href="/environment">Environment & Public Health</a></li> <li><a href="/grant-opportunities">Grant Opportunities</a></li> <li><a href="/tobacco/directory">Tobacco Directory</a></li> <li><a href="/tobaccogrants">Tobacco Grants</a></li> </ul> </div> <div class="clearfix visible-sm"></div> <div class="col-xs-12 col-md-3">  <p class="heading"><a href="/government">OPEN GOVERNMENT</a></p> <ul class="nav"> <li><a href="/initiatives">Ballot Initiatives</a></li> <li><a href="/conflict-interest">Conflicts of Interest</a></li> <li><a href="/cjsc/aboutcjsc">Criminal Justice Statistics</a></li> <li><a href="/meetings">Meetings and Public Notices</a></li> <li><a href="https://openjustice.doj.ca.gov/">OpenJustice Initiative</a></li> <li><a href="/consumers/general/pra">Public Records</a></li> <li><a href="/publications">Publications</a></li> <li><a href="/regulations">Regulations</a></li> </ul> <p class="heading">Memorial</p> <ul class="nav"> <li><a href="/memorial">Agents Fallen in the Line of Duty</a></li> </ul> <p class="heading">Vote</p> <ul class="nav"> <li><a href="http://registertovote.ca.gov/" target="_blank">Register to Vote</a></li> </ul> </div> <div class="col-xs-12 col-md-3"> <p class="heading">WHAT WE'RE WORKING ON</p> <ul class="nav"> <li><a href="/21st-century-policing">21st Century Policing</a></li> <li><a href="/bcj">Children’s Rights</a></li> <li><a href="/economic">Consumer Protection and Economic Opportunity</a></li> <li><a href="/environment">Environmental Justice</a></li> <li><a href="/equality">Equality</a></li> <li><a href="/health-care">Health Care</a></li> <li><a href="/immigrant">Immigration</a></li> <li><a href="https://openjustice.doj.ca.gov/" target="_blank">OpenJustice</a></li> </ul>  </div> <div class="col-xs-12 col-md-3"> <p class="heading"><a href="/media">MEDIA </a></p> <ul class="nav"> <li><a href="/consumers/alerts">Consumer Alerts</a></li> <li><a href="/media/news">Press Releases</a></li> <li><a href="/media/library">Media Library</a></li> </ul> <p class="heading"><a href="/careers">CAREERS</a></p> <ul class="nav"> <li><a href="/careers/civil">Getting a State Job</a></li> <li><a href="/careers/exams">Examinations</a></li> <li><a href="/careers/job-vacancies">Job Vacancies</a></li> <li><a href="/careers/students">Internships & Student Positions</a></li> <li><a href="/careers/honors/introduction">Attorney General's Honors Program</a></li> <li><a href="/careers/osg-fellowship" class="sub two-line">Geoffrey Wright Solicitor General Fellowship</a></li> </ul> </div> </div> </div> <div class="row"> <div class="container"> <div class="col-xs-12"> <ul class="list-inline"> <li><a href="https://oag.ca.gov/">Office of the Attorney General</a></li> <li><a href="/accessibility">Accessibility</a></li> <li><a href="/privacy-policy">Privacy Policy</a></li> <li><a href="/conditions">Conditions of Use</a></li> <li><a href="/disclaimer">Disclaimer</a></li> <li>© 2024 DOJ</li> </ul> </div> </div> </div> </div> </div><div id="block-block-418" class="block block-block"> <div class="content"> <script type="text/javascript"> jQuery(document).ready(function() { findEle = jQuery('.breadcrumb').find('li:first-child').text(); if (findEle == '') { jQuery('.breadcrumb').hide(); } }); </script> </div> </div> </div> </footer> <script src="https://oag.ca.gov/sites/default/themes/contrib/bootstrap/js/bootstrap.js?sndcgw"></script> </body> </html>

CINXE.COM

Pyramid Schemes / Multi-Level Marketing | State of California - Department of Justice - Office of the Attorney General