Michigan v. Cooper , 166 Mich. App. 638 (1987)

Is the incidental sale of a product a defense to the application of the Michigan pyramid statutes?

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The Court of Appeals held that the scheme was an illegal pyramid and a security. Cooper and others promoted a selling scheme where participants would pay a monthly fee and receive shipments of lotion. In addition to the product, they would receive the right to recruit additional people to sign up and would receive bonuses based on the number of active paying participants in their downline. Participants were sent additional product regardless of their need for it. Cooper argued that the plan was not an illegal pyramid because bonuses were paid based on products sold, and not on the recruitment of additional members as was required by the pyramid statute. The Court held that the sale of the product was incidental to the recruitment of additional participants and an attempt to avoid the application of the pyramid statute.

Full case and case summary are available at: http://www.mlmlegal.com/legal-cases/Michigan_v_Cooper.php

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

Reference Info:State, 6th Circuit, Michigan | 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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