Chain Referral

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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
The lawsuit by the Federal Trade Commission (FTC) takes aim at so-called 'chain referral' schemes involving cryptocurrencies, a first for the consumer protection agency.
Waldorf, "Snowball sampling: problems and techniques of chain referral sampling," Sociological Methods & Research, vol.
RDS is a form of chain referral sampling, similar to snowball sampling, that has been modified to reduce the biases inherent in traditional forms of chain referral sampling (Heckathorn, 1997).