Is MLM legal if...
 

Is multi-level-marketing/promoting legal if you are just using it for a promotion for your site?

Imagine you have a paysite...

And you tell your visitor:

"Send us one new visitor & we'll credit you with one free day on the site, if that visitor
sends us one visitor, you'll get 1/2 a day credit, if the visitors vistor sends someone you'll get 1/4 credit"

I know there are some laws and regulations around MLM, but I wonder if it would apply to something like this

I actually don't think there would be a problem with this. Then again, what do I know lol. But seeing as this is more like and extra bonus for a member I don't see anything wrong with that. You're not telling them that they have to pay extra on top of the membership fee in order to take part in this so I don't see how it can be illegal.

It's the same for the sposonrs that will pay you a comission if you reffer a webmaster and then pay you more comission on the webmaster you reffered reffers etc.. there are not many that do it like this but not because it's illegal to do so. They don't do it this way because in the end it would cost them too damn much. So what you're doing I say is all good.

And the service itself would be free....

Imagine there is a 'reward area' that the person can access only by spending his 'referral points' ... which can only be accumulated through sending new people to the site.

But portions of the income generated from the site would be from outside advertisers who would want to promote their goods and services to people on the site.

I don't talk about porn sites with my friends.

just me, but not a bad idea.

:2 cents:

It's not for porn.

But I figure... while in rome - give roman analogies.

MLMs are only illegal if people have to PAY to become a "tier" in your multilevel system. At that point it is a pyramid scheme.

But if they don't have to pay and you are just incentivizing downstream referrals, this should be okay.

Yeah that's what I was thinking.

I think I'll consult with an attorney that knows about MLM laws just to be sure.

Looks like you are setting up something like Amway's structure. Amway is legal. Although in practice, people do end up buying their own alloted goods... but that's voluntary as opposed to being mandatory as in pyramid schemes.

As papichulo already mentioned, as long as you sell something even a membership for consuming something, it's legal, but if you go for a money tire system only, you will run in problems.
Anyhow, this could also be different by each country of course