Burnlounge appeal rejected by Federal Appeals Court
Burnlounge appeal of their 2012 judgement as a pyramid scheme was rejected by the Ninth Circuit Court of Appeals, affirming that they are indeed, a pyramid scheme.
My short profile on Burnlounge:
http://amlmskeptic.blogspot.com/2012/09/scam-study-burnlounge.html
In their decision, the court stated that:
The district court found that because purchasing a package was required for participation as a Retailer or Mogul, and because Moguls earned cash for selling packages, “[Moguls] by default received compensation for recruiting others into the program.”The 9th Court's decision can be read here:
http://cdn.ca9.uscourts.gov/datastore/opinions/2014/06/02/12-55926.pdf
The short of it is, if you claim you sold something and are getting paid for that, but in effect you recruited and the recruits are required to buy something, then your claim of sales is invalid... You are getting paid for recruiting, not selling.
What is interesting is the court's decision reaffirmed Webster vs. Omnitrition as a precedent, but it's no surprise as it's also the Ninth Court that made the Omnitrition decision.
You can read my summary of Omnitrition case here:
http://amlmskeptic.blogspot.com/2014/01/mlm-dictionary-omnitrition-case_30.html
This would have some profound impact on some very big players in network marketing that relies on recruiting 'self-consumers' who then recruit more self-consumers to make themselves rich. Those who emphasize retail sales by sales teams should not be affected.
