Pyramid Selling
The question
To ask the Secretary of State for Business and Trade, what steps his Department is taking to ensure participants in multi-level marketing schemes are protected from misleading claims about the financial benefits of said schemes.
Answered by Justin Madders
Although multi-level schemes are not illegal, it is a criminal offence to persuade someone to make a payment to a scheme by promising benefits from getting other people to join the same scheme (Fair Trading Act 1973 section 120(3)).
Also, the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) prohibit unfair and misleading marketing tactics towards consumers. This includes “establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into a scheme rather than from the sale or consumption of products.”
To strengthen the enforcement of these and other consumer rights, the Digital Markets, Competition and Consumers Act 2024 increases the powers available for enforcement bodies.
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