Nielsen v. Myers

Does disclosure of the risks inherent in a pyramid scheme exempt a program from Oregon's Unlawful Trade Practices Act?

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The Oregon Court of Appeals held that awareness of the risks involved by participants does not allow it to escape the requirements of the Oregon Unlawful Trade Practices Act. NWFR operated a pure "cash-for-cash" pyramid scheme. They encouraged participants to discuss the program with others, allowed names other than those of the participants to be placed on the payout board, and made sure that the participants were aware that they scheme was risky and did not guarantee payment. The Oregon Court of Appeals held that despite these changes, the program was still regulated by the UTPA. The practices of the program were specifically designed to avoid the Act, and the Court held that mere textual evasion should not exempt a pyramid scheme in substance from regulation.

The full case and case summary are also available online at: http://www.mlmlegal.com/legal-cases/Nielsen_v_Myers.php

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Published In: Consumer Protection Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:State, 9th Circuit, Oregon | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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