FYI, I know you're a long standing member of FWS but please READ THIS
Legality
While Matrix site owners claim their sites are within the law, their claims are disputed in the courts. In addition, the U.S.
Federal Trade Commission and the U.K.
Trading Standards have issued warnings to the public about the sites. Several matrix sites have been shut down due to overwhelming legal fees defending lawsuits, such as the legal action taken against the grandfather of the matrix site, EZExpo.com.
Matrix site supporters claim that considerable research should be performed before investing in any such venture, but argue that the rewards for investing in a good matrix scheme are substantial. However, any research should reveal the ethical and legal problems with operating
any form of matrix scheme.
Further, the U.K. Office of Fair Trading considers them to be scams. On July 1st, 2005, the Office of Fair Trading in England declared that matrix schemes are a form of illegal lottery.
[1] While matrix sites may claim that they can declare themselves to be a private lottery, and thus operate legally, the very definition of a matrix scheme does not allow it to be defined as a legal private lottery.
[2] A private lottery must sell tickets only to
existing members of an already established club, society, workplace, or residence, and the club or society cannot have been formed for the purpose of having the lottery (which all matrix sites are). All the proceeds of the lottery must exclusively go to the prize or to benefit the society as a whole (no profits can go to the founder). Advertising the lottery outside the club, workplace, etc, is also illegal (all matrix sites require advertising of some sort to attract new members). And so on.
Beyond governments,
PayPal mentions matrix sites specifically as a violation of acceptable use policy
[3], grouping them together with
Multi-level marketing,
Pyramid and
Ponzi schemes, as well as nebulous "
Get Rich Quick" buisnesses that seem too good to be true. Violating this can lead to frozen accounts and other investigations
[4].