Document ID: chunk:federal_register_of_legislation:C2004A01065:clause:1_65aad
Version: federal_register_of_legislation:C2004A01065
Segment Type: clause
Provision Reference: sch 1 cl 65AAD
Character Range: 2829–4322

65AAD  What is a pyramid selling scheme?

 (1) In this Act:

pyramid selling scheme means a scheme with both the following characteristics:
 (a) to take part in the scheme, some or all new participants must make a payment (a participation payment) to another participant or participants in the scheme;
 (b) the participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled to a payment (a recruitment payment) in relation to the introduction to the scheme of further new participants.

 (2) A scheme may be a pyramid selling 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.

 (3) A scheme may be a pyramid selling 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).