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Pyramid Selling Act, 1980
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Prohibition of certain payments to promoters of schemes.

3.—(1) If any person who is a participant in a scheme or has applied or been invited to become a participant in a scheme—

(a) makes any payment to or for the benefit of the promoter of or (if there is more than one) any of the promoters of, or a participant in, the scheme or a person acting on behalf of a promoter of, or a participant in, a scheme, and

(b) is induced to make that payment by reason that the prospect is held out to him of receiving payments or other benefits in respect of the introduction of other persons who become participants in the scheme,

any person to whom or for whose benefit that payment is made shall be guilty of an offence.

(2) If the promoter or any of the promoters of, or a participant in, a scheme or a person acting on behalf of a promoter of, or a participant in, a scheme, by holding out to any person such a prospect as is mentioned in subsection (1) (b) of this section, induces or attempts to induce him to make any payment to or for the benefit of the promoter of or (if there is more than one) any of the promoters of, or to or for the benefit of a participant in, the scheme, or to or for the benefit of any person acting on behalf of a promoter of, or a participant in, a scheme, the person inducing him to make that payment shall be guilty of an offence.

(3) In determining, for the purposes of subsection (1) or subsection (2) of this section, whether an inducement is made by holding out such a prospect as is therein mentioned, it shall be sufficient if such a prospect constitutes or would constitute a substantial part of the inducement.

(4) Where the person by whom an offence is committed under subsection (1) or subsection (2) of this section or section 2 of this Act is not the promoter or the sole promoter of the scheme in question, any other person who is the promoter or (as the case may be) one of the promoters of the scheme shall, subject to section 5 of this Act, also be guilty of that offence.