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 08 August 2007
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Trading Schemes

Trading schemes may be called direct selling, network marketing, pyramid selling, multi-level marketing, or other names. Whatever it is called, it is a way of selling goods or services through a trading scheme which operates on more than one level.

People who join such schemes are self-employed and earn money by selling the schemes' goods or services. In some schemes participants may increase their earnings from the sales made by their recruits.

Such schemes are not illegal in the UK but they must comply with the provisions in Part XI of the Fair Trading Act as amended by the Trading Scheme Act 1996 and the Trading Scheme Regulations 1997

Many schemes are entirely legitimate, giving people opportunity to run their own small businesses. However some schemes have taken advantage of their participants and have taken their money without giving anything by the way of an honest business opportunity. This has led to the legislation which makes illegal the way in which some kinds of schemes operate.

DTI has issued a guidance booklet The Trading Scheme Guide which outlines the legistation and offers some advice on things to thgink about before joing a scheme. Our Fact Sheet answers some frequently asked questions about trading schemes.

Anyone who is concerned that they have been asked to join a scheme which may be acting illegally should write, with any supporting evidence, to:

Consumer & Competition Policy Directorate 2
(Trading Schemes)
Department of Trade and Industry
1 Victoria Street
London
SW1H 0ET

© Crown copyright 2007