Kansas City, KS asked in Banking, Business Formation and Business Law for Kansas

Q: I am starting an online business through Digital Altitude. They have asked me to take out a line of credit. HELP!

I am starting an online business through Digital Altitude. I have to purchase the next level of the "pyramid" to make any money. There are lots of testimonials saying how amazing they are but I am still not sure. They have asked me to take out a $50,000 line of credit, through Oak Tree Financial, to purchase the next level. How should I proceed?

1 Lawyer Answer
Scott C. Stockwell
Scott C. Stockwell
  • Business Law Lawyer
  • Lawrence, KS
  • Licensed in Kansas

A: You should proceed with caution and take no action without the advice of counsel. Your understood one set of circumstances to justify your initial involvement or investment. Now you are being asked to borrow money to "purchase" the next level. You have characterized the arrangement as a "pyramid" arrangement. You should be testing your involvement in such an arrangement by consulting with an attorney who could help you evaluate it. Some questions that might be appropriate might include: Why is the arrangement requiring you to borrow money? What are the terms for borrowing the money? What are you buying with the money? What are the risks that you will lose the investment you have made, the borrowed money, and have to pay back the loan with money from other resources you have (or don't have)? Are there blue sky laws that apply to this transaction and has the company promoting this "pyramid" complied with those laws?

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