KM.NET, an internet mall-type MLM, is under investigation by the Michigan Attorney General's office as a possible illegal pyramid scheme. In a March 24, 2000 announcement regarding the Notice of Intended Action, the Attorney General's office stated:

"in return for simply recruiting additional people to invest in their program, KM.NET offers participants $100 cash payments, called 'fast start bonuses,' and 'points' to be accumulated toward later 'commission' payouts."

The announcement continues:

"The Attorney General also alleges that because its bsusiness practices are 'deceptive' and cause the 'probability of confusion or misunderstanding' regarding a participant's legal rights, KM.NET is in violation of the Michigan Consumer Protection Act.

"Granholm said: 'Some call it a 'virtual mall' -- we call it a virtual pyramid."

As a result of the Attorney General's filing, KM.NET has entered into discussions with the state to try to reach an agreement. If an agreement is not reached that would stop the illegal pyramid activity, the State of Michigan will proceed with its suit.

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