Some pyramid selling schemes, also known as multi-level marketing plans, binary plans and matrix plans, are prohibited under the Consumer Protection Act, the Competition Act and the Criminal Code. Persons who organize them or participate in them can be legally prosecuted.

It is difficult to distinguish a legal pyramid selling scheme from an illegal one. The Office de la protection du consommateur recommends that you seek the opinion of a legal advisor before deciding to participate in one. You can find more details on this subject on the Web site of the Competition Bureau and the Web site of the Autorité des marchés financiers.


Illegal pyramid selling schemes rely on recruitment. The income of a participant is based on the recruitment of new participants who pay to enter into the scheme. Once recruited, they must recruit other persons themselves to get their premium. The income generated through recruitment increases as new levels of participants are added. In theory, the higher you are in the pyramid, the more money you make.

Here is an example: you pay $100 to enter the pyramid. You recruit 4 participants who will give $100 to the person whose name is at the top of the pyramid. These new participants must, in turn, recruit 4 other participants each. When you name reaches the top of the pyramid, you receive 256 times $100.

In most cases, your name will never reach the top of the pyramid. Recruitment dwindles quickly to the point of being impossible. The persons who initiated the pyramid scheme will have made off with the money long before the scam revealed.

How to recognize an illegal pyramid selling scheme?

  • Usually, there is no exchange of goods or services, only recruitment.
  • They continually repeat that it is legal.
  • They lead you to believe that it is possible to earn a lot of money quickly and easily.
  • "Paying" your entry fee entitles you to recruit other participants.

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Last update : November 21, 2019

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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.