The Kansas Supreme Court ruled that the activities of Koscot violated the state unlawful business practices act, and the revocation of the company's business license and injunctions preventing similar operations were appropriate. Koscot sold cosmetics though a network of distributors who were compensated for recruiting additional members. The Court found that the sale of cosmetics was incidental to the operation of the company; its main goal was to increase the number of distributors. However, because continued revenue required continued recruitment, and recruitment could not expand at the exponential rate required forever, the promises of future wealth to new recruits were illusory, and violated of the state unlawful trade practices act.
Full case and case summary are also available at: http://www.mlmlegal.com/legal-cases/Kansas_v_KoscotInterplantetaryInc.php
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