Love v. Durastill of Richmond, Inc.

Is the payout of commissions and bonuses beyond a single level of recruitment necessary for a company to be regulated as a pyramid scheme?


The Virginia Supreme Court held that payouts beyond a single level of recruitment were not necessary to find a company to be a pyramid scheme. Durastill claimed that the essential nature of a pyramid scheme as defined by statute was a plan whereby new members were enticed to join based on the opportunity to make money on multiple levels of sales by their down lines. The Court disagreed, holding that the statute was designed to regulate promotional programs where profit was only possible through never ending expansion. Because Durastill's marketing program was based on the position that a new recruit would be faced with fewer selling opportunities than their recruiter, the same principle was at play.

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Reference Info:State, 4th Circuit, Virginia | 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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