Unfair Commercial Practices Directive, Annex I, 14.

It is not possible to establish, operate or promote a pyramid scheme in accordance with requirements set out by law.

The defendant set up advertisements of a pyramid scheme on billboards across the city of Tallinn. The advertisement included the following text: “Sergei-Mavrodi.com. A gift of EUR 15 for registering. WARNING! Pyramid schemes are dangerous for your financial health! Information 590 277 46; justmmm2011@gmail.com”

The advertisement in question referred to a website with URL sergey-mavrodi.com, where an offer was made to the consumers to participate in a pyramid scheme for the purposes of earning money.

On 7 November 2011, a representative of the Consumer Protection Board called the phone number indicated in the advertisement and acted as a consumer wishing to participate in the scheme. The representative of the defendant confirmed that the scheme was indeed a pyramid scheme, although a completely legal and credible one. In addition, the representative claimed the scheme already had attracted almost 1000 members.

Subsequently, the Consumer Protection Board issued a precept to OÜ Deksim Trade, in which it referred to the unlawfulness of OÜ Deksim Trades’ practice and required it to cease the misleading practice.

 

In a short reasoning, the Board reminded that establishing, operating or promoting a promotional scheme whereby a consumer is able to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products (pyramid promotional scheme), constitutes a misleading commercial practice in all circumstances and is therefore always prohibited.

Next, the Board overruled the claims of the defendant regarding the lawfulness of its pyramid scheme.

 

Is it possible to establish, operate or promote a pyramid scheme in accordance with requirements set out by law?

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The defendant was required to cease the misleading practice and remove all advertisements of the pyramid scheme.