Competition and Consumer Act 2010
Sch 2 s 45Meaning of pyramid scheme
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45 Meaning of pyramid scheme
(1) A pyramid scheme is a scheme with both of the following characteristics:
(a) to take part in the scheme, some or all new participants must provide, to another participant or participants in the scheme, either of the following (a participation payment):
(i) a financial or non‑financial benefit to, or for the benefit of, the other participant or participants;
(ii) a financial or non‑financial benefit partly to, or for the benefit of, the other participant or participants and partly to, or for the benefit of, other persons;
(b) the participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled, in relation to the introduction to the scheme of further new participants, to be provided with either of the following (a recruitment payment):
(i) a financial or non‑financial benefit to, or for the benefit of, new participants;
(ii) a financial or non‑financial benefit partly to, or for the benefit of, new participants and partly to, or for the benefit of, other persons.
(2) A new participant includes a person who has applied, or been invited, to participate in the scheme.
(3) A scheme may be a pyramid scheme:
(a) no matter who holds out to new participants the prospect of entitlement to recruitment payments; and
(b) no matter who is to make recruitment payments to new participants; and
(c) no matter who is to make introductions to the scheme of further new participants.
(4) A scheme may be a pyramid scheme even if it has any or all of the following characteristics:
(a) the participation payments may (or must) be made after the new participants begin to take part in the scheme;
(b) making a participation payment is not the only requirement for taking part in the scheme;
(c) the holding out of the prospect of entitlement to recruitment payments does not give any new participant a legally enforceable right;
(d) arrangements for the scheme are not recorded in writing (whether entirely or partly);
(e) the scheme involves the marketing of goods or services (or both).