Chain Referral

A type of sales plan that convinces individuals to make purchases based upon the promise that their payment will be reduced for each new purchaser they recommend to the seller.

Referral sales in general are under close scrutiny by Consumer Protection laws and are illegal in many states due to their fraudulent and misleading nature. A chain referral is a type of pyramid sales scheme whereby an innocent consumer is lulled into investing money based on the promise that he will eventually make money, which is usually highly unlikely, if not impossible.

Cross-references

Ponzi Scheme.