MLM Law: Nevada State Laws
The Nevada consumer protection statutes contain a prohibition on the operation of pyramid distribution schemes. The Nevada law incorporates a standard definition of a pyramid scheme, defining such devices as any plan where a person gives consideration for the opportunity to receive in return consideration or other things of value; "for procuring or obtaining one or more additional persons to participate in the program, or for the opportunity to receive compensation of any kind when a person introduced to the program or plan by the participant procures or obtains a new participant in such a program."
"Compensation" for inducing others to join the program does not include payments "based on sales of goods or services to persons who are not participants in a pyramid promotional scheme or endless chain and who are not purchasing in order to participate in such a program.;".
"Consideration" is not defined in the Nevada law. Contracts made in Nevada "which have any part of the consideration given for the right to participate in a pyramid promotional scheme" are voidable by the participant. Nevada Revised Statutes §598.100 and 598.120.