Pyramid and referral program, where exactly is the line?

It turns out from the point of view of the law, the creator of an Internet service with paid access and a referral program can be accused of creating a pyramid, provided that few people use this service from those who bought access to it. Let's try to figure it out in more detail.

Let's take examples of modern pyramids disguised as any services. For example, this site BigMoney.VIP social network with paid access, has now grown to 400 users. Simply access is taken from the user 200 dollars for 1 year of using the site and at the request of the user, you can bring referrals, you have a percentage of them. Most users of the site, in my opinion, have the desire to build a network of referrals and earn money. Isn't it a pyramid? Definitely a pyramid. Instead of a social network, you can hide behind another pseudo service, cashback or something else, if the main income comes from attracting people, then this is a pyramid. On the other hand, this is not a pyramid! I would like to hear the opinion of other users of the site.

And now, let's take the case if a person does not have the intention to create a pyramid. They'll just create some kind of mindless service, although they'll believe in it and promotes it with the help of a referral program. Their service also began to gain momentum and many registered, but people register not because they like the service, but to earn on referrals (registration in the service is paid for access to the service itself) those. This situation brings us back to the first pyramid case. Unwittingly, They become the owner of the pyramid. And suppose for a second that 50% of users started using their service, then the referral program fades into the background, and there is nothing criminal in the scheme. It's just a service with a referral program.

Quote from Wikipedia: "The fundamental difference between a financial pyramid and a real business project is the source of income payment. If the amount of income payments consistently exceeds the value added that this business provides, then we can safely say that the project is a pyramid."

So where is the line? If 99% registered only for the sake of earning money in an affiliate program, then this is like a pyramid. And if 80%? what if it's 90%? When will the service cease to be considered a pyramid scheme? It turns out everything is at the discretion of the judge and there is no specifics in the law. The people making their businesses have not read up on the law itself. And what follows from this: using the referral program at the initial stage of development is simply dangerous...

None of the normal referral programs are interested in users themselves registering as referrals and receiving any payments. Second point: try to decompose the math, i.e. there is a businessman, and he has some kind of service or product, the cost of which is the figure N, the profit is the figure N2, and from the profit we are ready to spend N3 on marketing, P1 of which will go to payments to active advertisers.

If you begin to be interested in the legal point of view, then you need to start with the law and the definition in it of what a pyramid is from the position of the legislator. I think when you clarify these two points for yourself, you will be able to understand the signs of the pyramid and the mathematics that reflects its essence. After that, the meaning of your question will disappear.

"None of the normal referral programs are interested in users themselves registering as referrals and receiving any payments. Second point: try to decompose the math, i.e. there is a businessman, and he has some kind of service or product, the cost of which is the figure N, the profit is the figure N2, and from the profit we are ready to spend N3 on marketing, P1 of which will go to payments to active advertisers.

If you begin to be interested in the legal point of view, then you need to start with the law and the definition in it of what a pyramid is from the position of the legislator. I think when you clarify these two points for yourself, you will be able to understand the signs of the pyramid and the mathematics that reflects its essence. After that, the meaning of your question will disappear."

Do you have any clarity on this matter? I didn’t see it from the answer, but I perfectly understand mathematics, how it should be good and from what deductions should go to referrals. Here extreme individual cases are considered and how they can be interpreted from the point of view of the law.

Amir, if you think like that, then any multi-stage affiliate program falls under the "pyramid" - anyone who pays people to attract other people (who will buy or register)
According to my data, as far as I understood it to myself, a "pyramid" is when there is ONLY an exchange of money (registration - $ 500, you get $ 200 for a referral), despite the fact that there are NO goods or services.
If there are services (hosting, etc.), then this is no longer a pyramid scheme.
Simply put, a pyramid is when money rotates inside from person to person.
And then, if the element of "basis" - or "pillar" - is removed from this network, then this is no longer a pyramid.

The pyramid has an external debt. GoldLine international pure MLM.

Pyramid (mlm) is not a scam, it is a scheme to attract an audience.

Referral programs are a special case of pyramids/mlm.

Not surprisingly, the high efficiency of mlm marketing attracts scammers, for whom efficiency comes first.

The line between scam and non-scam lies in fraud, misrepresentation, false promises, cashing out and so on.

If you say "bring us a user and get $20, but pay $50 for the right to participate in the program", then this is OK, if you pay of course.

If you say "bring us a user and you can earn on a Bentley in six months", then this is not OK, even if you do not charge money for the right to refer users at all and make payments, because not everyone who brought a user will earn on a Bentley.

Now mlm schemes of work are very popular, in recent years the number of customers from this area has greatly increased in our country.

SMM marketing is just perfect for them, because, a fair part of the audience is guided by reviews on the Internet, and the mlm scheme in the SMM segment allows you to arrange massive imperceptible stuffing of information that gives a much greater effect than just buying advertising.

An obligatory criterion is misleading the user, deceiving the user. If this is not the case, then it does not matter which scheme you use.