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Help Centre > All About PayPal/Policies > Does PayPal prohibit transactions for pyramid, matrix and multi-level marketing programmes?

Does PayPal prohibit transactions for pyramid, matrix and multi-level marketing programmes?

Yes. To determine if transactions violate this policy, PayPal considers these factors:
  • Commissions offered to recruit new members
  • Requirements for new distributors to purchase costly inventory or 'start-up kits'
  • Members' profits derived from recruiting new members or from the sales of newly-recruited members ('downline') rather than their own sales
  • Payouts from fees or contributions paid by new or existing members
  • Money paid into the system that is significantly greater than money paid out
  • Unrealistic or unsupported promises regarding profits or return on investment
  • Percentage of the company's goods sold by a non-distributor
  • Flow of money derived from new members predominantly moves 'upline'
  • Preservation of the business rests on the exponential growth of new members or customers
  • Offers of speculative real estate or non-development property
  • Business functioning as an auto-surf investment programme or a high-yield investment programme
  • Warnings from governmental agencies about the business model

PayPal defines these programmes as follows.

Pyramid schemes – Existing members receive payouts funded by new payments into the programme from new member fees or existing member contributions.

Matrix programs – Individuals pay primarily to be added to a waiting list for a product. The individual at the top of the list receives the product only after a set number of people have joined after that individual.

"Get rich quick" schemes – Include any type of self-employment, start-up business or investment opportunity where the claims of profit or returns on investment are unrealistic or unsupported.

Multi-level marketing programmes – Individuals receive proceeds from their sales of goods or services and from those of recruited members. PayPal generally prohibits multi-level marketing programmes that offer payouts to both the seller and the individual(s) who recruited the seller. PayPal reserves the right to permit certain multi-level marketing programmes at its sole discretion.

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