Ohio v. Purchase Plus

Does the sale of products to distributors, for resale as well as for their personal consumption, constitute a business transaction that falls under the Ohio State Consumer Sales Practices Act?


The Ohio Court of Appeals held that the transactions did fall under the act. Purchase Plus recruited distributors to sell phone cards to consumers and to other distributors. They were encouraged to make use of the products themselves, but signed an agreement with the company to resell at least 50% of the cards that they purchased. The Court of Appeals held that two aspects of the program brought it under the Consumer Sales Practices Act: the personal use of the cards, and the encouragement to build a downline of other distributors. Personal use of the cards, even though part of a larger, mostly business, transaction, subjected the consumer portion of the transaction to the Act. Also, by encouraging distributors to build a downline of other distributors, the program begins to resemble the structure of a pyramid scheme, a structure previously found by the court to also fall under the statute.

Case and case summary are also available online at: http://www.mlmlegal.com/legal-cases/Ohio_v_PurchasePlus.php

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Reference Info:State, 6th Circuit, Ohio | 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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