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MLM Law: Ohio Pyramid Sales Plans
Effective: March 8, 2019
R.C. § 1333.91
This section effective 3-8-19. See, also, section 1333.91 effective until 3-8-19.
As used in sections 1333.91 to 1333.94 of the Revised Code:
(A) “Pyramid promotional scheme” means any plan or operation by which individuals pay consideration for the chance or opportunity to receive compensation that is derived primarily from recruiting other individuals into the plan or operation rather than from the sale of products or services to ultimate users or from the consumption or use of products or services by ultimate users.
(B) “Compensation” means money, financial benefit, or anything of value. Compensation does not include payment based upon sales made to persons who are not participants in a pyramid promotional scheme, and who are not purchasing in order to participate in the plan or operation.
(C) “Consideration” means the payment of money or anything of value or the purchase of products, services, or intangible property. The term does not include:
(1) Payment for sales demonstration equipment and materials furnished at cost for use in making sales and not for resale;
(2) Any time or effort spent in pursuit of sales or recruiting activities.
(D) “Ultimate user” means an individual who consumes or uses a product or service, whether or not the individual is a participant in the plan or operation.
Sec. 1333.92. No person shall propose, plan, prepare, or operate a pyramid promotional scheme.
Sec. 1333.93. Any contract made in violation of section 1333.92 of the Revised Code is void. Any individual who has paid consideration for the chance or opportunity to participate in a pyramid promotional scheme may recover, in a civil action, the amount of the consideration paid, together with reasonable attorney fees, from any participant who has received compensation under either of the following circumstances:
(A) For introducing the individual into participation in a pyramid promotional scheme;
(B) When another participant has introduced the individual into participation in a pyramid promotional scheme.
Sec. 1333.94. (A) Failure to comply with section 1333.92 of the Revised Code constitutes an unfair or deceptive act or practice in connection with a consumer transaction in violation of section 1345.02 of the Revised Code.
(B) The attorney general may do the following:
(1) Whenever it appears that a person is violating or about to violate section 1333.92 of the Revised Code, bring an action in the court of common pleas to enjoin the violation. Upon a proper showing, a temporary restraining order, or a preliminary or permanent injunction shall be granted without bond. The court may impose a penalty of not more than five thousand dollars for each day of violation of a temporary restraining order or preliminary or permanent injunction issued under this section.
(2) Use all the powers and remedies available to the attorney general to enforce sections 1345.01 to 1345.13 of the Revised Code to enforce sections 1333.91 to 1333.94 of the Revised Code.
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