---
title: Can a Pyramid Schemes Have Product?
description: 🔵 Can a Pyramid Schemes Have Product? Yes, pyramid schemes often have products, but the products usually exist only as a cover for the recruitment-based income structure.
url: https://flawlessmlm.com/en/faq/can-a-pyramid-schemes-have-product
last_updated: '2026-08-12'
language: en
type: faq
keywords: ''
published_date: '2026-05-29'
---

# Can a Pyramid Schemes Have Product?

**Updated:** May 2026

Oleksandr Honcharov, CEO at FlawlessMLM 

Yes, pyramid schemes often have products, but the products usually exist only as a cover for the recruitment-based income structure. Can a pyramid schemes have product is exactly the question regulators ask, and the answer determines whether the scheme is legal or not. A product alone doesn't make the scheme legitimate.

**How products function in pyramid schemes**

*   **Products as a legal shield** — schemes use products to claim they are "legitimate" MLM companies under the law.
*   **Internal consumption only** — most product purchases come from distributors qualifying for commissions, not from outside customers.
*   **Overpriced or low-quality** — items are typically marked up 3-5x compared to similar non-MLM products.
*   **No genuine retail demand** — products would not sell at the offered price outside the distributor network.
*   **Wellness, beauty, and supplements common** — categories that allow for vague performance claims and high margins.
*   **The FTC test** — at least 70% of sales must go to outside retail customers for the structure to be considered a legitimate MLM.

**Definition:** Pyramid schemes can and often do have products, but the products usually function as a legal cover for the recruitment-based structure. Regulators look past the existence of a product to whether sales actually go to outside customers or only to distributors qualifying for commissions.

Just because something has a product doesn't make it legitimate. The FTC's 70% rule is the practical test: if 70% or more of sales aren't to real outside customers, the scheme is functioning as a pyramid, regardless of what's in the catalog.

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Source: [FlawlessMLM FAQ](https://flawlessmlm.com/en/faq/can-a-pyramid-schemes-have-product)