Q: I want to know whether it is poonzi or mlm
My question is a Ponzi scheme. I have seen a legitimate business marked as a clubs sells subscriptions only and member of the club can recruit other members as well for a share of their proportion of the new members' subscription. Is this MLM or Ponzi
I think you have a very legitimate answer, but I have studied some accounting and subscription is an income, not an investment
A:
This isn't really a legal question, however, a Ponzi scheme's defining feature is using incoming money from one member or account to pay money to an unrelated member or account. New money must always be coming in to sustain a Ponzi scheme, because the "business" isn't generating profit, it's just falsely presenting incoming investment as profits: borrowing from Peter to pay Paul.
The defining feature of a multi-level-marketing scheme are sales uplines and downlines: where one member has other members above or below them, who have an interest in their profits/sales. There may also be compelled purchasing requirements, where the "sales representative" buys inventory with their own money and resells it, instead of selling the inventory from the business. What you've described sounds more like a MLM business.
These organizations can come in many forms and may have overlapping features. While almost all forms of Ponzi schemes are illegal, MLM companies are usually regulated by state law and many forms are permitted.
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