South Carolina v. VIP Enterprises

Does the payment of recruitment bonuses to distributors by a company instead of directly from new recruits exempt such a program from state pyramid statutes?


The South Carolina Court of Appeals held that regardless of who actually paid the distributors, the company was an unlawful pyramid scheme subject to regulations. VIP argued that the exact words of the statute required payments for recruiting new members to be made directly to the recruiter. The Court disagreed, holding that to do so would defeat the purpose of the statute through an overly technical interpretation. The court further held that employees of the company could not be held liable for the company's actions unless they were exercised control over managerial decisions.

Case and case summary are also available online at:

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

Reference Info:State, 4th Circuit, South Carolina | 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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