Missouri v. Consumer Auto Resources , 882 S.W.2d 717 (1994)

Under Missouri State Law, did the activities of Consumer Auto Resources constitute a pyramid scheme?

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The Missouri Court of Appeals held that C.A.R. was an unlawful pyramid scheme. C.A.R. members paid a monthly fee to receive discounts on the purchase of new cars though affiliated car dealers. Members were paid bonuses for signing up new members of their downline and also received a percentage of their downline's monthly fee. C.A.R. claimed that the membership bonuses were advances on the commissions made on the sale of a new car to the members, and were not paid for the recruitment of the members, a violation of the state pyramid statute. However, the company only ever made commissions on two car sales despite having 1400 members. The court concluded that program operated by inducing others to participate, and not through the legitimate sale of goods or services.

Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Missouri_v_ConsumerAutoResources.php

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

Reference Info:State, 8th Circuit, Missouri | 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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