Multi-level Marketing and Pyramid Selling

The Competition Act explains the differences between multi-level marketing plans and schemes of pyramid selling, and sets out the responsibilities for operators and participants in these types of plans. Multi-level marketing, when it operates within the limits set by the Act, is a legal business activity, while a scheme of pyramid selling is illegal as defined by the law.

Multi-level Marketing

Multi-level marketing is a plan for the distribution of products whereby participants earn money by supplying products to other participants in the same plan. They, in turn, make money by supplying the same or other products to other participants.

Operators of, and participants in, legitimate multi-level marketing plans should disclose:
the different levels of earnings or compensation received by participants in the plan; the amount of money earned by a typical participant; and the time and effort required to reach specific levels of income.

For more information

Visit our Multi-level Marketing and Pyramid Selling pamphlet for more useful information.

Visit our Enforcement Guidelines on the Multi-level Marketing Plans and Schemes of Pyramid Selling — Sections 55 and 55.1 of the Competition Act.

Pyramid Selling

A scheme of pyramid selling is illegal under the Competition Act. It is a multi-level marketing plan that includes either compensation for recruitment, required purchases as a condition of participation, inventory loading, or the lack of a buy-back guarantee on reasonable commercial terms.

For more information

Visit our Multi-level Marketing and Pyramid Selling pamphlet for more useful information.

Visit our Enforcement Guidelines on the Multi-level Marketing Plans and Schemes of Pyramid Selling — Sections 55 and 55.1 of the Competition Act.