There is another difference between chain letters and legitimate network marketing programs. The chain letters fraudulently promise a level of remuneration which is unrealistic. It is a simple matter of mathematics. If one person could really send out letters, and get two people, each of whom would get two people, and it went down the line, in very short order the numbers of people involved would exceed the population of the United States. There are also some state laws that come into play in this area.
Most states have laws that parallel the federal lottery laws.
For example, Utah defines an illegal pyramid scheme as a sales device or plan where the compensation is derived primarily from the introduction of other persons into the sales device or plan rather than from the sale of goods, services, or other property. Criminal penalties are imposed for violating the section. South Dakota has a statute outlawing chain referral programs where a product is sold to someone with the hope that they can pay for it or earn money by referring others, and also has a statute similar to that in Utah. The authorities can be rough on programs they perceive to by pyramid schemes. While mere misrepresentations in mail pieces are often the subject of civil proceedings with the goal of obtaining a consent order, lotteries are more often prosecuted criminally.