State Statutes



Unless the context otherwise requires:

(1) "Participant" shall include, but is not limited to, those who give consideration in order to participate in the pyramid distribution plan;

(2) "Person" means natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, or any other legal entity;

(3) "Promotes" means inducing one (1) or more other persons to become a participant;

(4) "Pyramid distribution plan" means any plan, program, device, scheme, or other process by which a participant gives consideration for the opportunity to receive compensation or things of value in return for inducing other persons to become participants in the program;

(5) "Compensation" means payment of any money, thing of value, or financial benefit conferred in return for inducing others to become participants in the pyramid distribution plan. Compensation does not include payment based on sales of goods or services by the person or by other participants in the plan to anyone, including a participant in the plan, who is purchasing the goods or services for actual use or consumption; and

(6) "Consideration" means the payment of cash or the purchase of goods, services, or intangible property but does not include the purchase of goods or services furnished at cost to be used in making sales and not for resale, nor does it include time and effort spent in pursuit of sales or recruiting activities.

HISTORY:  1986 c 184, § 1, eff. 7 15 86


(1) It is hereby declared unlawful for any person to establish, promote, operate, or participate in any pyramid distribution plan.

(2) A limitation as to the number of persons who may participate or the presence of additional conditions affecting eligibility for the opportunity to receive compensation under the plan does not change the identity of the plan as a pyramid distribution plan nor is it a defense under this section that a participant, on giving consideration, obtains goods, services or intangible property in addition to the right to receive compensation.

HISTORY: 1986 c 184, ยง 2, eff. 7 15 86


Penalty: 367.990(20)(a)

Links to Specific States

MLM Law in 50 States

Other Pages of Interest

MLM Law in 50 States

Every state has adopted laws regulating MLM companies. Visit this page to look up MLM law in your state.

read more »

MLM Law Library

MLM law in 50 states, IRS Publication 911, the MLM Textbook, as well as a comprehensive index of articles on the direct selling industry.

read more »

MLM Article Directory

Browse hundreds of articles on distributor education, MLM company ownership, the legal environment, and so much more. View some of our most popular articles on the FTC, Vemma, Herbalife, and Burnlounge.

read more »

Key Pages to Visit While You're Here

  1. The MLM Startup Conference

    Register Today for the MLM Startup Conference

    For Startup and Existing MLM Companies

    Register Today!
  2. Free MLM Startup Manual

    Free MLM Startup Manual

    Starting and Running the Successful MLM Company manual

    Get Your Copy Today!
  3. MLMLegal

    The Best MLM Resource on the Web

    Jeff Babener - MLM Expert Attorney & Business Advisor

Follow Babener & Associates on our social networks. Stay current on legal news, cases, videos, and articles. Contact us today!

About 28 minutes ago