This is closer to Multi-Level Marketing, which can still be shady, however is also a legitimate form of marketing. It really depends on the finer details.

The network marketing or multi-level marketing (MLM) business has become associated with pyramid schemes. According to the U.S. Federal Trade Commission, many MLM schemes "simply use the product to hide their pyramid structure".[7] While some people call MLMs in general "pyramid selling,"[8][9][10][11][12] others use the term to denote an illegal pyramid scheme masquerading as an MLM.[13]

The Federal Trade Commission warns, "It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."[14] It states that research is your best tool and gives eight steps to follow:

1 - Find—and study—the company’s track record.
2 - Learn about the product.
3 - Ask questions.
4 - Understand any restrictions.
5 - Talk to other distributors. Beware of shills.
6 - Consider using a friend or adviser as a neutral sounding board, or for a gut check.
7 - Take your time.
8 - Think about whether this plan suits your talents and goals.[14]

Some authorities contend that MLMs in general are nothing more than legalized pyramid schemes.