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Pyramid Schemes and Similar Practices

Several states prohibit certain illegal business schemes through deceptive trace practices statutes. One such scheme is a “pyramid scheme,” where investors make money by recruiting others to join and invest in a company rather than selling a product as claimed by the company. Other schemes include deceptive employment opportunity claims and misleading or deceptive game or contest promotions. Some states do not specifically include these schemes in the statute, but courts in those states may have applied provisions of the relevant deceptive trade practices statute in cases involving these schemes.

Inside Pyramid Schemes and Similar Practices