Q: 5
H manufactures and sells healthy dietary supplements. The company recruits individuals as part-
time agents to sell its products to friends and colleagues. These agents are required to buy H's
products and to resell them at a small mark-up.
For a fee, H will provide agents with training in persuasive selling techniques. Agents who pass
exams at the conclusion of this training can become distributors. Distributors buy bulk quantities of
H's products at a discount and can recruit their own sales agents. Those agents can also take training
and can recruit agents of their own.
At what stage does H stop being a legitimate business and become a pyramid selling fraud?
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