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Virginia: Pyramid and Sales Referral Laws
VIRGINIA ACTS OF ASSEMBLY -- CHAPTER
An Act to amend and reenact งง 18.2-239 and 59.1-200 of the Code of Virginia, relating to definition of pyramid promotional schemes; penalty.
Be it enacted by the General Assembly of Virginia:
1. That งง 18.2-239 and 59.1-200 of the Code of Virginia are amended and reenacted as follows:
ง 18.2-239. Pyramid promotional schemes; misdemeanor; definitions; contracts void.
Every person who contrives, prepares, sets up, operates, advertises or promotes any pyramid promotional scheme shall be guilty of a Class 1 misdemeanor. For the purposes of this section:
(1) "Compensation" means the transfer of money or anything of value.
"Compensation" does not mean payment based on sales of goods or services to persons who are not participants in the scheme and who are not purchasing in order to participate in the scheme;
(2) "Consideration" means the payment of cash or the purchase of goods, services, or intangible property;
(3) "Promotes" means inducing one or more other persons to become a participant
(4) "Pyramid promotional scheme" means any plan or operation by which a person gives consideration for the opportunity to receive compensation a majority of which is derived from the introduction of other persons into the plan or operation rather than from the sale or consumption of goods, services, or intangible property by a participant or other persons introduced into the plan or operation.
All contracts and agreements, now existing or hereafter formed, whereof the whole or any part of the consideration is given for the right to participate in pyramid promotional scheme programs, are against public policy, void and unenforceable.
Any violation of the provisions of this section shall constitute a prohibited practice under the provisions of ง 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (ง 59.1-196 et seq.).
Deceptive Sales Referral Practices Prohibited:
Certain referral transactions in connection with consumer sales or leases prohibited; effect of such transactions
(a) For the purpose of this section, the term "consumer sale or lease of goods or services" means the sale or lease of goods or services which are purchased or leased by a natural person primarily for a personal, family or household purpose, and not for resale.
(b) With respect to a consumer sale or lease of goods or services, no seller or lessor shall give or offer to give a rebate or discount or otherwise pay or offer to pay value to the buyer or lessee as an inducement for the sale or lease in return for the buyer's giving to the seller or lessor the names of prospective buyers or lessees, or otherwise aiding the seller or lessor in entering into a transaction with another buyer or lessee, if the earning of the rebate, discount, or other value is contingent upon the occurrence of any sale, lease, appointment, demonstration, interview, conference, seminar, bailment, testimonial or endorsement subsequent to the time the buyer or lessee enters into the agreement of sale or lease.
(c) Agreements made in whole or in part pursuant to a referral transaction as above described shall be void and unenforceable by the seller or lessor. The buyer or lessee shall be entitled to retain the goods, services or money received pursuant to a referral transaction without obligation to make any further or future payments of any sort on the transaction total, or he shall be entitled to avoid the transaction and to recover from the seller or lessor any sums paid to the seller or lessor pursuant to the transaction.
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