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The question was asked today, "Is Webtalk a Pyramid scheme?" I would like to give my answer here.

A Pyramid Scheme is a business that requires the payment of fees by new members in order to keep the financial promises to old members. If the introduction of new members ever stops, the business collapses and all but those who got in just before the collapse lose money. This kind of business is illegal, at least here in the US and I think in most parts of the world.

A multi-level marketing business is a business model in which members of the business can benefit from the sales of their referrals and the referrals of their referrals and so on for multiple levels. Legitimate mlms are legal. Webtalk is an mlm. Some mlms require a some form of payment for membership. Sometimes that payment is supposedly for the product or service that the business offers. When the business stops growing, the last in members stop paying, then those that referred the last-in members stop paying and so on until the business collapses and many people lose their money. These mlms that depend on the addition of new paying members are pyramid schemes and they are illegal. Often, the governments comes after money earned in pyramid schemes and attempt to refund it to the people who lost money.

If Webtalk depended on the sale of subscriptions to new members to pay its previous members it could considered a pyramid scheme. But Webtalk does not require a fee for an affiliate to earn money. It is currently paying members who have never purchased anything from the company. The company depends primarily on advertising revenues. Whether the affiliates continue to recruit new members or not, Webtalk is going to maintain a healthy member base and its affiliates are going to earn from money earned by Webtalk in a number of ways.

Some people will not be able to distinguish between a legitimate multi-level business and a pyramid scheme. The person who asked the question was dealing with a person who said Webtalk is illegal in Spain because it is a pyramid scheme. I checked Spain. There are many mlms in Spain. We need to give up on people who cannot see the difference in a legitimate mlm and a pyramid scheme
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