51-16.1 Pyramid Promotional and Referral Sales Schemes
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<![CDATA[CHAPTER 51-16.1PYRAMID PROMOTIONAL AND REFERRAL SALES SCHEMES51-16.1-01. Definitions. As used in this chapter, unless the context or subject matterotherwise requires:1."Compensation" includes a payment based on a sale or distribution made to a<br>person who either is a participant in a pyramid promotional scheme or has the right<br>to become a participant upon payment.2."Consideration" means the payment of cash or the purchase of goods, services, or<br>intangible property but does not include:a.The purchase of goods or services furnished at cost to be used in making sales<br>and not for resale; orb.Time and effort spent in pursuit of sales or recruiting activities.3."Pyramid promotional scheme" means any plan or operation by which a participant<br>gives consideration for the opportunity to receive compensation which is derived<br>primarily from any person's introduction of other persons into participation in the plan<br>or operation rather than from the sale of goods, services, or intangible property by<br>the participant or other persons introduced into the plan or operation.51-16.1-02. Pyramid promotional schemes prohibited - Defenses excluded.1.No person may establish, operate, advertise, or promote a pyramid promotional<br>scheme.2.It is not a defense to a criminal or civil prosecution under this section that:a.The plan contains a limitation as to the number of persons who may participate<br>or the presence of additional conditions affecting eligibility for the opportunity to<br>receive compensation under the plan or operation; orb.A participant, on giving consideration, obtains any goods, services, or intangible<br>property in addition to the right to receive compensation.51-16.1-03. Referral selling prohibited. No seller or lessor may give or offer a rebate,discount, or anything of value to a buyer or lessee as an inducement for a sale or lease in<br>consideration of the buyer or lessee giving to the seller or lessor the names of prospective<br>purchasers or lessees, or otherwise aiding the seller or lessor in making a sale to another<br>person, if the earning of the rebate, discount, or other thing of value is contingent upon the<br>occurrence of an event subsequent to the time the buyer or lessee agrees to the sale or lease.51-16.1-04. Penalty - Civil remedies. Any person, including the officers and directors ofany company, violating any of the provisions of this chapter is:1.Guilty of a class A misdemeanor, but a person who has been previously convicted of<br>a class A misdemeanor under this chapter may be charged with and convicted of a<br>class C felony for any violation which occurs after the previous conviction;2.Deemed to have committed an unlawful practice in violation of section 51-15-02 and<br>subject to all provisions, procedures, and penalties of chapter 51-15; and3.Notwithstanding any agreement to the contrary, subject to the right of any purchaser<br>in a pyramid promotional scheme or referral selling scheme to declare the sale or<br>contract void and also subject to an action in a court of competent jurisdiction by anyPage No. 1purchaser to recover three times the damages sustained by the purchaser in<br>participating in the scheme, plus reasonable attorney's fees and costs.51-16.1-05. Scope of remedies.1.The rights and remedies that this chapter grants to purchasers in pyramid<br>promotional schemes and referral selling schemes are independent of and<br>supplemental to any other right or remedy available to them in law or equity, and<br>nothing contained herein may be construed to diminish or to abrogate any such right<br>or remedy.2.The provisions of this chapter are in addition to all other causes of action, remedies,<br>and penalties available to the state or any of its governmental agencies.Page No. 2Document Outlinechapter 51-16.1 pyramid promotional and referral sales schemes]]>