44-1731

44-1731. Definitions

In this article, unless the context otherwise requires:

1. "Compensation" includes a payment based on a sale or distribution made to a
person who either is a participant in a pyramid promotional scheme or has the right to
become a participant upon payment.

2. "Consideration" means the payment of cash or the purchase of goods, services or
intangible property but does not include:

(a) The purchase of goods or services furnished at cost to be used in making sales
and not for resale.

(b) Time and effort spent in pursuit of sales or recruiting activities.

3. "Pyramid promotional scheme" means any plan or operation by which a participant
gives consideration for the opportunity to receive compensation which is derived
primarily from any person's introduction of other persons into participation in the plan
or operation rather than from the sale of goods, services or intangible property by the
participant or other persons introduced into the plan or operation.