A pyramid selling scheme is one in which goods or services are sold and the participants in the scheme receive payment or other benefit for introducing other people into the scheme as new participants. As each new participant is introduced to the scheme, the original participant moves further up the 'pyramid' and, depending upon the rules of the scheme, ultimately receives some payment or benefit, usually consisting of a contribution from each new participant. As there is usually a practical limit on the number of people willing to participate in the scheme, it is usually those who join the scheme at the start who receive some benefit whereas those joining at a later stage often have to make a payment but receive no benefit in return.
The Competition and Consumer Act 2010 (Cth) [Schedule 2 s 44] makes it an offence to participate in such a scheme, or to promote one. Under the Competition and Consumer Act 2010 (Cth) Schedule 2 the maximum fines are $220 000 for a person and $1 100 000 for a corporation.
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