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It sounds more like a high-tech version of a MLM (Multi-Level-Marketing) company. Most MLMs (about 98%) die within 5 years, 50% of those die in their first year, about 75% of the ones left over die before year 2, and the rest just dwindle due to inactivity or bad reputations over the next 3 years. Less than 2% of new MLMs make it past their 5th year. To date, less than a handful of companies have ever made it past 12 years, and the longest running MLM was Amway (which was structured more like a pyramid until it was renamed, restructured, and eventually evaporated).
The largest one I know of now that is over 5 years old is a nutrional based company. I want to say it's called Nutrition For Life, but for some reason that isn't hitting my brain as accurate. Their big gimmick is that after a certain point of production, the company will actually pay your car payment up to $450/month. After another point of production, the company will pay up to $750/month for a car payment... Forever. The restriction is you have to be approved for the car on your own. Then, you get the payment book and mail it to the company headquarters. They write the check for you until the car is paid. Once that car is paid, you are allowed to go buy another one and send in the payment book again.
In any case, the difference between a MLM and a pyramid is that in a pyramid, the top person will ALWAYS be making more money than anyone underneath them (in their "downline"), whereas in a MLM (which, by the way, ARE perfectly legal) it all depends on your personal performance. An MLM doesn't have as solid of a "downline" so much as it does "out" or "side" lines.
Pyramid Example:
Bob gets into an Pyramid from his cousin. Bob gets me into the same. I actually make the damn thing work and Bob does nothing else for the rest of his life except meet whatever minimum requirements the program has for him to stay in (if he doesn't, Bob is eliminated and I move to directly under his cousin). If his cousin does the same thing as Bob, the final outcome will be: I make X dollars, Bob makes Y + residual of X = more than X, and Bob's cousin makes Z + residual of Y + residual of X = more than Y. So, Bob's cousin makes the most, Bob makes less than his cousin but more than me, and I make the least.... no matter what else happens. Because MY downline is THEIR downline.
MLM Example:
Same three people. Same three personal scenarios. This time, Bob's cousin only gets a small percentage of what Bob's income is. Bob gets a small percentage of what my income is. I get my entire income and a percentage of that produced by each member of my network. If I grow my personal network large enough, I break away from Bob and create my own nucleous. Bob will receive a very very small residual of my income (typically 4% or less), but if Bob does nothing else and makes $12/year on his own, while I make $500grand a year, Bob's total is: $20,012. He does NOT make more than me, unless he works at it.
IF this is a new age MLM, then the question of it's legality is: the program is legal if they abide by the laws and don't disappear one day. If it's not an MLM, then there are questions to it's legitimacy and legality... even if they DO make their payments without disappearing.
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