[1] The meaning of a multi-level marketing organization under Article 2 subparagraph 5 of the Door-to-Door Sales Act

[2] The case reversing the judgment below that the sales organization operated by the defendants did not constitute a multi-level sales organization

[1] In a case where the sales of goods and attracting the sales of the sales of goods are recommended to obtain retail profits and bonuses, thereby joining the sales organization, and the same process is repeated by stages of three or more levels, even if the method of paying the bonus of the sales organization is determined not to be affected by the sales performance of the sales of the sales organization, not by the immediate assistant salesman, such sales organization should be deemed to constitute a multi-level sales organization.

[2] The case reversing the judgment below that the sales organization operated by the defendants did not constitute a multi-level sales organization

[1] Article 2 subparag. 5 and 7 of the Door-to-Door Sales Act, Article 2(1)1 of the Enforcement Decree of the Door-to-Door Sales Act, Article 5(1) of the Enforcement Rule of the Door-to-Door Sales Act / [2] Article 2 subparag. 5 and 7 of the Door-to-Door Sales Act, Article 2(1)1 of the Enforcement Decree of the Door-to-Door Sales Act, Article 5(1) of the Enforcement Rule of the Door-to-Door Sales, etc. Act

Defendant 1 and two others

Prosecutor

Seoul Central District Court Decision 2004No3888 Decided January 14, 2005

The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court Panel Division.

1. The summary of the facts charged in this case is as follows: ① The defendants conspired to join the multi-level marketing organization without registering multi-level marketing business to the administrative authority; ② The defendant's office from January 2004 to July 14, 200 is composed of yellow Ginseng Co., Ltd. (hereinafter referred to as the "Yel ginseng"), which is sold by Yellow Ginseng and 100 won, with the condition that consumers purchase 3.50,00 won; ② the above multi-level marketing organization's subscription to the above multi-level marketing organization's purchase of the above product under the condition that the above multi-level marketing organization's purchase of the product by the above multi-level marketing organization's offering of two multi-level marketing salespersons and the above multi-level marketing organization's purchase of the product under the condition that the above multi-level marketing organization's purchase of the product is not a multi-level marketing organization's purchase of the product under the condition that the above multi-level marketing organization's purchase of the product is not a multi-level marketing organization's purchase of the product.

2. However, it is difficult to accept such measures by the lower court.

A. The conceptual elements of the "multi-stage" proposed by Article 2 subparagraph 5 of the Act are as follows: ① the phase of the salesperson that the salesperson was admitted to the phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of phase of participation, and ② as above, the granting of economic benefits (retail profits and bonuses) to sales and inducement activities is utilized as inducement (in inducement), and the payment of the bonus does not require not only the sales performance of the immediately assistant salesman of the relevant salesperson but also that it is affected by the sales performance of the assistant salesman.

B. The court below held that the concept of "sub-salesman" under Article 2 subparagraph 7 of the Act, which provides for the concept of bonuses, should not be interpreted as a multi-stage sales organization of the relevant multi-stage sales organization, and that there is no reasonable ground to limit the concept of "sub-salesman" under Article 2 subparagraph 7 of the Act to that of the relevant multi-stage sales organization, and (2) of Article 5 (1) of the Enforcement Rule, "the bonus must be affected not only by the sales performance of the relevant assistant sales organization, but also by the sales performance of other salespersons that affect the bonus of the relevant assistant sales organization," and it should be interpreted as a "sales organization" under Article 2 (1) 1 of the Enforcement Decree, which is identical or similar to that of the salesperson in the payment method of bonuses to the sales performance of the multi-stage sales organization (see Article 2 (1) 2 of the Enforcement Decree of the Multi-stage sales Organization Act, and it should not be interpreted that the above part of the multi-stage sales organization should not be included in the scope of the above 1).

C. The reason why the Act strictly regulates multi-level marketing is that such sales form is likely to cause speculative behavior and damage to consumers by depending on the expansion of sales organization by directly engaging in large-scale sales and tobacco sales. Thus, even in a case where the payment of bonuses depends only on the sales performance of the immediately assistant multi-level marketing, it is highly likely that the amount of bonuses increases as much as the number of the immediately assistant multi-level marketing members increases. From the standpoint of the immediately assistant multi-level marketing, the total amount of bonuses that he/she intends to receive depends on the sales performance of the immediately assistant multi-level marketing is determined by the sales performance of the immediately assistant multi-level marketing. Therefore, regardless of the intention of the immediately upper-level marketing member, there is strong incentive to recruit and join a large number of assistant multi-level marketing members. Therefore, the harm of multi-level marketing as seen above, such as expansion of unlimited bags, dependence on large-level sales and tobacco sales, and the result of the multi-level marketing, which caused the occurrence, is unreasonable from the point of view of the lower court’s understanding that the sales organization does not have its inherent meaning.

D. Ultimately, inasmuch as the sales of goods and the attraction of a salesperson are recommended to obtain retail profits and bonuses when the sales of goods and the recruitment of a salesperson are carried out, and the same process has been phasedly and accumulated in three or more levels, even if the method of paying the bonus of the sales organization has been determined as not affecting the sales performance of the sales performance of the assistant salesman, not the immediate assistant salesman, such sales organization should be deemed as constituting a multi-level marketing organization.

E. Nevertheless, the court below held that the sales organization of the defendants belongs to a multi-level marketing organization only for a few reasons in its decision, and such judgment of the court below is erroneous in the misapprehension of legal principles as to multi-level marketing under Article 2 subparagraph 5 of the Act, which affected the conclusion of the judgment by misunderstanding the legal principles as to multi-level marketing under Article 2 subparagraph 5 of the Act, and the prosecutor pointed this out

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court. It is so decided as per Disposition.

Justices Yang Sung-tae (Presiding Justice)