In this article, unless the context otherwise requires:
1. “Compensation” includes a payment based on a sale or distribution made to a person who either is a participant in a pyramid promotional scheme or has the right to become a participant upon payment.
2. “Consideration” means the payment of cash or the purchase of goods, services or intangible property but does not include:
(a) The purchase of goods or services furnished at cost to be used in making sales and not for resale.
(b) Time and effort spent in pursuit of sales or recruiting activities.
3. “Pyramid promotional scheme” means any plan or operation by which a participant gives consideration for the opportunity to receive compensation which is derived primarily from any person's introduction of other persons into participation in the plan or operation rather than from the sale of goods, services or intangible property by the participant or other persons introduced into the plan or operation.
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