Quoted from the USPS. (United States Postal Service) I think most countries have the same opinion.
..there are many multi-level distributorship schemes that are nothing more than sophisticated chain letters. They operate as a "pyramid," claiming participants can earn lots of money by concentrating most, if not all, of their efforts on recruiting distributors rather than selling a product.
Fraudulent pyramid schemes typically violate the Postal Lottery Statute (Title 18, United States Code, Section 1302). They contain all three elements of a lottery: prize (expectation of monetary or other gain from participation in the pyramid); chance (the monetary return you may receive from your participation is entirely up to chance, that is, dependent on the efforts of those below you in the pyramid), and consideration (the fee you pay to become a distributor). Frequently, the entrance fee into the pyramid is very high. In many cases, the money spent for such an entrance fee can often be considered lost the moment you pay.
Full article:
http://www.usps.com/websites/depart/inspec...ect/pyramid.htmIt doesn't actually say that they are illegal, but it does metion fraud - which is.
The general consensus I've had is the same as lgwong was told - if there's no product its illegal. But then if the product is doomed to fail and you have to make a large outlay to begin with, isn't it the same thing?