luật MLM của Mĩ(2)

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KEVINTHOMPSON

MLM LAWS IN 50 STATES

www.facebook.com/mlmlaw

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INDEX

Sl. No1

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1112

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2122

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StatesAlabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

GuamHawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

MarylandMassachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Page No4

5

6

8

9

10

12

14

15

16

2526

27

30

31

32

33

35

37

39

4043

45

46

48

51

52

56

58

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60

61

66

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68

70

www.theadvocategroup.net


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Sl. No37

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4041

42

43

44

45

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48

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5051

52


StatesOklahoma

Oregon

Pennsylvania

Puerto RicoRhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West VirginiaWisconsin

Wyoming

Page No71

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7677

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91

93

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98100

101



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ALABAMA

Section 8-19-5

Unlawful trade practices.


The following deceptive acts or practices in the conduct of any trade or commerce are hereby

declared to be unlawful:

(1) Passing off goods or services as those of another, provided that this section shall not prohibit

the private labeling of goods or services.

(18) Using or employing a chain referral sales plan in connection with the sale or offering for

sale of goods, merchandise, or anything of value, involving a sales technique, plan, arrangement,

or agreement in which the buyer or prospective buyer is offered the opportunity to purchasemerchandise or goods and in connection with the purchase receives the seller's promise or

representation that the buyer shall have the right to receive compensation or consideration in any

form for furnishing to the seller the names of other prospective buyers, if the receipt of thecompensation or consideration is contingent upon the occurrence of an event subsequent to the

time the buyer purchased the goods, merchandise, or anything of value.

(19) Selling or offering to sell, either directly or associated with the sale of goods or services, a

right to participation in a pyramid sales structure. As used herein, "pyramid sales structure"

includes any plan or operation for the sale or distribution of goods, services, or other property

wherein a person for consideration acquires the opportunity to receive a pecuniary benefit, which

is based primarily upon the inducement of additional persons by that person, and others,regardless of number, to participate in the same plan or operation, and is not primarily contingent

on the volume or quantity of goods, services, or other property sold or distributed. For purposesof this subdivision, "consideration" shall not include payments made for sales demonstration

equipment and materials furnished on a nonprofit basis for use in making sales and not for resale

wherein such payments amount to less than $100 annually.

(20) In connection with any seller-assisted marketing plan, either misrepresenting the amount or

extent of earnings to result therefrom, or misrepresenting the extent or nature of the market for

the goods or services, or both, sold or delivered in connection with the plan, or misrepresentingthat the seller of the plan will repurchase all or part of the goods or services, or both, sold or

delivered in connection with the plan, or failing to deliver goods or services, or both, within thetime represented. As used herein, "seller-assisted marketing plan" includes any plan, scheme, orsystem in which for a consideration a buyer acquires goods or services, or both, together with aplan, scheme, or system for the resale of said goods or services, or both.

(Acts 1981, No. 81-355, p. 510, 5; Acts 1993, No. 93-203, 1.)



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ALASKA


Chapter 50. Competitive Practices and Regulation of Competition.

AS 45.50.561. Definitions.

In AS 45.50.471 - 45.50.561

(1) "advertising" includes the attempt directly or indirectly by publication, dissemination,

solicitation, endorsement, or circulation, display in any manner, including solicitation ordissemination by mail, telephone or door-to- door contacts, or in any other way, to induce

directly or indirectly a person to enter or not enter into an obligation or acquire title or interest in

any merchandise or to increase the consumption of it or to make a loan;

.

(3) "chain distributor scheme" means a sales device whereby a person, upon condition that the

person make an investment, is granted a license or right to solicit or recruit for profit one or more

additional persons who are also granted a license or right upon condition of making an

investment and may further perpetuate the chain of persons who are granted a license or rightupon the condition of investment; a limitation as to the number of persons who may participate,

or the presence of additional conditions affecting eligibility for the license or right to solicit orrecruit or the receipt of profit from these does not change the identity of the scheme as a chaindistributor scheme; as used in this paragraph, "investment" means acquisition, for a considerationother than personal services, of tangible or intangible property, and includes but is not limited to

franchises, business opportunities and services; "investment" does not include salesdemonstration equipment and materials furnished at cost for use in making sales and not forresale;

AS 45.50.471. Unlawful Acts and Practices.

(a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of

trade or commerce are declared to be unlawful.

(b) The terms "unfair methods of competition" and "unfair or deceptive acts or practices"

include, but are not limited to, the following acts:

(19) using a chain referral sales plan by inducing or attempting to induce a consumer to enter

into a contract by offering a rebate, discount, commission, or other consideration, contingentupon the happening of a future event, on the condition that the consumer either sells, or gives



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information or assistance for the purpose of leading to a sale by the seller of the same or related

goods;

(20) selling or offering to sell a right of participation in a chain distributor scheme;

ARIZONA

44-1731 . Definitions

In this article, unless the context otherwise requires:

1. "Compensation" includes a payment based on a sale or distribution made to a person whoeither 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 fromthe sale of goods, services or intangible property by the participant or other persons introduced

into the plan or operation.

44-1732 . Violation; classification

A. Any person who violates any of the provisions of this article is guilty of a class 6 felony.

B. The attorney general or county attorney, or both, shall institute the criminal actions to enforce

the provisions of this article.

C. An act or practice in violation of this article constitutes an unlawful practice under section 44-1522. The attorney general may investigate and take appropriate action as prescribed by chapter

10, article 7 of this title.

44-1733 . Sale or contract for sale of interest in pyramid promotional scheme voidable

Any purchaser in a pyramid promotional scheme may, notwithstanding any agreement to the

contrary, declare the related sale or contract for sale void, and he may bring an action in a courtof competent jurisdiction to recover the consideration he paid to participate in the scheme. In



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such action the court shall, in addition to any judgment awarded to the plaintiff, require the

defendant to pay interest, reasonable attorneys' fees and the costs of the action, less any money

paid to the plaintiff as profit in the transaction.

44-1735 . Pyramid promotional scheme; prohibition; defenses excluded

A. A person shall not establish, operate, advertise or promote a pyramid promotional scheme.

B. A limitation as to the number of persons who may participate or the presence of additional

conditions affecting eligibility for the opportunity to receive compensation under the plan or

operation does not change the identity of the scheme as a pyramid promotional scheme nor is it a

defense under this article that a participant, on giving consideration, obtains any goods, servicesor intangible property in addition to the right to receive compensation.



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ARKANSAS


Title 4. Business and Commercial Law.

Subtitle 7. Consumer Protection.

Chapter 88. Deceptive Trade Practices.

Subchapter 1. General Provisions.

4-88-109. Pyramiding devices.

4-88-109. Pyramiding devices.

(a) Every person who contrives, prepares, sets up, proposes, or operates any pyramiding device

shall be guilty of an unlawful practice.

(b)(1) As used in this section, a pyramiding device shall mean any scheme whereby a participant

pays valuable consideration for the chance to receive compensation primarily from introducingone (1) or more additional persons into participation in the scheme or for the chance to receive

compensation when a person introduced by the participant introduces a new participant.

(2) "Compensation", as used in this section, does not mean or include payment based upon salesmade to persons who are not participants in the scheme and who are not purchasing in order to

participate in the scheme.



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CALIFORNIA

CALIFORNIA CODES

PENAL CODE

SECTION 319-329


319. A lottery is any scheme for the disposal or distribution of property by chance, amongpersons who have paid or promised to pay any valuable consideration for the chance of obtaining

such property or a portion of it, or for any share or any interest in such property, upon anyagreement, understanding, or expectation that it is to be distributed or disposed of by lot or

chance, whether called a lottery, raffle, or gift enterprise, or by whatever name the same may be

known.

320. Every person who contrives, prepares, sets up, proposes, or draws any lottery, is guilty of a

misdemeanor.

321. Every person who sells, gives, or in any manner whatever, furnishes or transfers to or for

any other person any ticket, chance, share, or interest, or any paper, certificate, or instrument purporting or understood to be or to represent any ticket, chance, share, or interest in, or

depending upon the event of any lottery, is guilty of a misdemeanor.

322. Every person who aids or assists, either by printing, writing, advertising, publishing, or

otherwise in setting up, managing, or drawing any lottery, or in selling or disposing of any ticket,

chance, or share therein, is guilty of a misdemeanor.

327. Every person who contrives, prepares, sets up, proposes, or operates any endless chain is

guilty of a public offense, and is punishable by imprisonment in the county jail not exceeding

one year or in state prison for 16 months, two, or three years. As used in this section, an "endless

chain" means any scheme for the disposal or distribution of property whereby a participant paysa valuable consideration for the chance to receive compensation for introducing one or more

additional persons into participation in the scheme or for the chance to receive compensationwhen a person introduced by the participant introduces a new participant. Compensation, as usedin this section, does not mean or include payment based upon sales made to persons who are notparticipants in the scheme and who are not purchasing in order to participate in the scheme.



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COLORADO

6-1-102 - Definitions.


As used in this article, unless the context otherwise requires:

(1) "Advertisement" includes the attempt by publication, dissemination, solicitation, or

circulation, visual, oral, or written, to induce directly or indirectly any person to enter into any

obligation or to acquire any title or interest in any property.

(7) "Promoting a pyramid promotional scheme" means inducing one or more other persons to

become participants, or attempting to so induce, or assisting another in promoting a pyramidpromotional scheme by means of references or otherwise.

(8) "Property" means any real or personal property, or both real and personal property, intangible

property, or services.

(9) "Pyramid promotional scheme" means any program utilizing a pyramid or chain process by

which a participant in the program gives a valuable consideration in excess of fifty dollars for the

opportunity or right to receive compensation or other things of value in return for inducing other

persons to become participants for the purpose of gaining new participants in the program.

Ordinary sales of goods or services to persons who are not purchasing in order to participate insuch a scheme are not within this definition.

6-1-105 - Deceptive trade practices.

(1) A person engages in a deceptive trade practice when, in the course of such person's business,

vocation, or occupation, such person:

(a) Knowingly passes off goods, services, or property as those of another;

(b) Knowingly makes a false representation as to the source, sponsorship, approval, or

certification of goods, services, or property;

(p) Solicits door-to-door as a seller, unless the seller, within thirty seconds after beginning the

conversation, identifies himself or herself, whom he or she represents, and the purpose of the

call;

(p.3) (I) Solicits a consumer residing in Colorado by telephone as a seller, unless the seller,within one minute after beginning the conversation, identifies himself or herself, whom he or she

represents, and the purpose of the call or repeatedly causes any telephone to ring or engages any

person in a telephone conversation repeatedly or continuously with the intent to annoy, abuse, or

harass any person at the telephone number called.



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(II) The provisions of this paragraph (p.3) shall not apply to a telephone solicitation between a

seller and a consumer if there is an existing business relationship between the seller and the

consumer at the time of the telephone solicitation or if the call is initiated by the consumer.

(q) Contrives, prepares, sets up, operates, publicizes by means of advertisements, or promotes

any pyramid promotional scheme;



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CONNECTICUT


General Statutes of Connecticut, Revised to 1997

Title-42 - Business, Selling, Trading and Collection Practices

Sec. 42-144. Definitions.

Sec. 42-145. Contingent consideration void.

CHAPTER 741

CONTINGENT TRANSACTIONS

Sec. 42-144. Definitions.

As used in this chapter:

(a) "Advertisement" includes the attempt by publication, dissemination, solicitation or

circulation, written or oral, to induce directly or indirectly, any person to enter into any

obligation or acquire any title or interest in any merchandise;

(b) "Merchandise" includes any objects, wares, goods, commodities, intangibles, securities,

bonds, debentures, stocks, real estate or services;

(c) "Services" includes any supply of accommodations, work, repair or other needs, instructionor education, including any type of training course in any field such as personality improvement,

self motivation, salesmanship and similar fields;

(d) "Rights or privileges" includes the right or privilege to market, distribute, wholesale or retail,

merchandise or services or to procure others to do so;

(e) "Procure" includes obtaining, providing, inducing, suggesting, soliciting, recruiting, training,

supervising, advancing in position, or aiding or abetting any of the activities specified in this

subsection;

(f) "Person" includes any natural person, or his legal representative, partnership, limited liabilitycompany, corporation, whether domestic or foreign, company, trust, business entity or

association, and any agent, employee, salesman, partner, officer, director, member, stockholder,

associate, trustee or cestui que trust thereof;



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(g) "Sale" includes any sale, offer of sale or attempt to sell any merchandise, services, or rights

or privileges for any consideration, or aiding or abetting any of the activities specified in this

section;

(h) "Trade and commerce" means the advertising, offering for sale, sale or distribution of

services and property, tangible or intangible, and any other article, commodity or thing of valuewherever situate, and shall include any trade or commerce directly or indirectly affecting the

people of this state;

(i) "Commissioner" means the Commissioner of Consumer Protection.

Sec. 42-145. Contingent consideration void.

The advertisement for sale, lease or rent, or the actual sale, lease or rental of any merchandise,

service or rights or privileges at a price or with a rebate or payment or other consideration to thepurchaser which is contingent upon the procurement of prospective customers procured by the

purchaser, or the procurement of sales, leases or rentals of merchandise, services, rights orprivileges, to other persons procured by the purchaser, is declared to be an unlawful practicerendering any obligation incurred by the buyer in connection therewith, completely void and anullity. The rights and obligations of any contract relating to such contingent price, rebate orpayment shall be interdependent and inseverable from the rights and obligations relating to thesale, lease or rental.



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DELAWARE

2561. Definitions.

As used in this subchapter:


(1) "Pyramid or chain distribution scheme" means a sales device whereby a person, upon a

condition that he part with money, property or any other thing of value, is granted a franchise

license, distributorship or other right which person may further perpetuate the pyramid or chainof persons who are granted such franchise, license, distributorship or right upon such condition.

A limitation as to the number of persons who may participate, or the presence of additionalconditions upon the eligibility for such a franchise, license, distributorship or other right recruit

or upon the receipt of profits therefrom, does not change the identity of the scheme as a pyramidor chain distribution scheme.

(2) "Person" includes an individual, corporation, trust, estate, partnership, unincorporated

association, or any other legal or commercial entity.

2562. Unlawful practice.

The use of a pyramid or chain sales distribution scheme in connection with the solicitation of

investments in the form of money, property or any other thing of value is hereby declared to be

an unlawful practice under 2513 of this title.

2563. Prohibition.

(a) No person, either directly or through the use of agents or other intermediaries, shall promote,

sell, attempt to sell, offer or grant participation in a pyramid or chain distribution scheme.

(b) Whoever, directly or through the use of agents or intermediaries, violates subsection (a) of

this section shall be fined not more than $5,000, or imprisoned not more than 3 years, or both.

(c) The Superior Court shall have exclusive jurisdiction of offenses under this section.

2564. Contracts void; civil liability.

(a) Any contract made in violation of 2563 of this title shall be void and any person who,

directly or through the use of agents or intermediaries, induces or causes another person to

participate in a pyramid or chain distribution scheme shall be liable to that person in an amountequal to the sum of: (1) Twice the amount of any consideration paid; and (2) In the case of any

successful action to enforce such liability, the costs of the action together with a reasonableattorney's fee, as determined by the court.



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(b) An action under this section may be brought in any court in this State otherwise having

jurisdiction over the dollar amount being sought by way of recovery within one year from the

date on which the consideration was paid.

FLORIDA

849.091 Chain letters, pyramid clubs, etc., declared a lottery; prohibited; penalties

(1) The organization of any chain letter club, pyramid club, or other group organized or brought

together under any plan or device whereby fees or dues or anything of material value to be paidor given by members thereof are to be paid or given to any other member thereof, which plan ordevice includes any provision for the increase in such membership through a chain process of

new members securing other new members and thereby advancing themselves in the group to a

position where such members in turn receive fees, dues, or things of material value from other

members, is hereby declared to be a lottery, and whoever shall participate in any such lottery by

becoming a member of, or affiliating with, any such group or organization or who shall solicit

any person for membership or affiliation in any such group or organization commits amisdemeanor of the first degree, punishable as provided in sec. 775.082 or sec. 775.083.

(2) A "pyramid sales scheme," which is any sales or marketing plan or operation whereby a

person pays a consideration of any kind, or makes an investment of any kind, in excess of $100

and acquires the opportunity to receive a benefit or thing of value which is not primarily

contingent on the volume or quantity of goods, services, or other property sold in bona fide sales

to consumers, and which is related to the inducement of additional persons, by himself or herselfor others, regardless of number, to participate in the same sales or marketing plan or operation, ishereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a

member of or affiliating with, any such group or organization or who shall solicit any person for

membership or affiliation in any such group or organization commits a misdemeanor of the firstdegree, punishable as provided in sec. 775.082 or sec. 775.083. For purposes of this subsection,the term "consideration" and the term "investment" do not include the purchase of goods or

services furnished at cost for use in making sales, but not for resale, or time and effort spent inthe pursuit of sales or recruiting activities



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GEORGIA

10-1-410.


As used in this part, the term:

(1) "Agreement" means any agreement relating to a business opportunity or multilevel

distribution company, including, but not limited to, the contract.

(6) "Multilevel distribution company" means any person, firm, corporation, or other business

entity which sells, distributes, or supplies for a valuable consideration goods or services through

independent agents, contractors, or distributors at different levels wherein such participants may

recruit other participants and wherein commissions, cross-commissions, bonuses, refunds,discounts, dividends, or other considerations in the program are or may be paid as a result of thesale of such goods or services or the recruitment, actions, or performances of additionalparticipants. The term shall not include licensed insurance agents, insurance agencies, licensed

real estate brokers, licensed real estate agents, licensed real estate agencies, licensed securitiesdealers, licensed limited securities dealers, licensed securities salesmen, or licensed limitedsecurities salesmen. Any multilevel distribution company which operates in any of the forms precluded by paragraphs (1) through (4) of subsection (a) of Code Section 10-1-411 shall beconsidered an unlawful pyramid club under Code Section 16-12-38.

(7) "Participant" means anyone who participates at any level in a multilevel distribution

company.

(8) "Person" means any individual, corporation, partnership, joint venture, association, trust,unincorporated organization, or other entity and shall include any other person that has a

substantive interest in or effectively controls such person as well as the individual officers,directors, general partners, trustees, or other individuals in control of the activities of suchperson.

(9) "Purchaser" means any person who is solicited to become obligated, or does become

obligated, under any agreement.

(10) "Seller" means any multilevel distribution company or it means any person who offers to

sell to individuals any business opportunity, either directly or through any agent.

10-1-411.

(a) No multilevel distribution company or participant in its marketing program shall:

(1) Operate or, directly or indirectly, participate in the operation of any multilevel marketing

program wherein the financial gains to the participants are primarily dependent upon thecontinued, successive recruitment of other participants and where sales to nonparticipants are not

required as a condition precedent to realization of such financial gains;



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(2) Offer to pay, pay, or authorize the payment of any finder's fee, bonus, refund, override,

commission, cross-commission, dividend, or other consideration to any participant in amultilevel marketing program solely for the solicitation or recruitment of other participantstherein;

(3) Offer to pay, pay, or authorize the payment of any finder's fee, bonus, refund, override,commission, cross-commission, dividend, or other consideration to any participant in amultilevel marketing program in connection with the sale of any product or service unless the participant performs a bona fide supervisory, distributive, selling, or soliciting function in thesale or delivery of such product or services to the ultimate consumer;

(4) Offer to pay, pay, or authorize the payment of any finder's fee, bonus, refund, override,

commission, cross-commission, dividend, or other consideration to any participant:

(A) Where payment thereof is or would be dependent on the element of chance dominating overthe skill or judgment of such participant;

(B) Where no amount of judgment or skill exercised by the participant has any appreciable effect

upon any finder's fee, bonus, refund, override, commission, cross-commission, dividend, or otherconsideration which the participant may receive; or

(C) Where the participant is without that degree of control over the operation of such plan as to

enable him substantially to affect the amount of finder's fee, bonus, refund, override,

commission, cross-commission, dividend, or other consideration which he may receive or beentitled to receive; or

(5) Represent, directly or by implication, that participants in a multilevel marketing program will

earn or receive any stated gross or net amount or represent in any manner the past earnings ofparticipants except as may be permitted under this part; provided, however, that a written orverbal description of the manner in which the marketing plan operates shall not, standing alone,constitute a representation of earnings, past or future. Multilevel distribution companies shall notrepresent, directly or by implication, that it is relatively easy to secure or retain additionaldistributors or sales personnel or that most participants will succeed.

10-1-412.

(a) Any business opportunity seller or company which represents, in conjunction with any

agreement which requires a total initial payment of an amount exceeding $500.00, that the seller

or company will refund all or part of the price paid for the business opportunity or willrepurchase any of the products, equipment, supplies, or chattels supplied by the seller orcompany if the purchaser is dissatisfied with the business opportunity and any multileveldistribution company must either have obtained a bond issued by a surety company authorized todo business in this state or have established a trust account with a licensed and insured bank orsavings institution located in this state. For purposes of this subsection, deposits shall not be

considered part of the price paid for the business opportunity. The amount of the bond or trust

account shall be an amount not less than $75,000.00. The bond or trust account shall be in favor



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of the state for the benefit of any person who is damaged by any violation of this part or by the

seller's or company's breach of the contract or agreement or of any obligation arising therefrom.Such person may bring an action against the bond or trust account to recover damages suffered; provided, however, that the aggregate liability of the surety or trustee shall be only for acdamages and in no event shall exceed the amount of the bond or trust account. A multilevel

distribution company which requires an initial payment of less than $500.00 from eachparticipant shall be exempt from the requirements of this Code section.

10-1-413.

(a) Every multilevel distribution company intending to have participants in this state, with an

agreement made in this state, or with its principal place of business in this state shall have readilyavailable to any potential participants, prior to obtaining any participants in this state orelsewhere, a copy of the contract and of any material incorporated by reference into the contractto be used with participants. In every instance in which a multilevel distribution company solicitsany initial payment in excess of $500.00, the multilevel distribution company shall also have

readily available to the particular potential participant or participants, prior to signing thecontract, a disclosure statement containing the following:

(1) The name and principal business address of the company; whether the company is doing

business as a proprietorship, partnership, or corporation; the names under which the companyhas done, is doing, or intends to do business; and the name of any parent or affiliated companythat will engage in business transactions with participants;

(2) The names, addresses, and titles of the company's officers, directors, and trustees;

(3) The length of time the company has:

(A) Been engaged in multilevel distribution; and

(B) Been engaged in multilevel distributions involving the types of products, equipment,

supplies, or services currently offered to the purchaser; and

(4) A detailed description of the levels of distribution in the multilevel program, the manner in

which participants will be compensated, and the extent or amount of any compensation.

(b) Every seller shall update the disclosures required by subsection (b) of Code Section 10-1-411

and by subsection (a) of Code Section 10-1-413 as often as any material change in the required

information occurs, but not less than annually.

(c) Whenever a multilevel distribution company must provide the disclosure statement required

by subsection (a) of this Code section, the multilevel distribution company, prior to obtainingany participant, shall provide that participant with an 8 1/2 inch by 11 inch document in at leastten-point type, which reads as follows:



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NOTICE REQUIRED BY STATE LAW REGARDING DISCLOSURES

State law requires that a multilevel distribution company shall make

available certain disclosures regarding the company prior to obtaining

participants. This is your official notice that you have a right to request tosee these disclosures prior to entering into any agreement with a multileveldistribution company. This will be the only notice you receive regardingyour rights to see these disclosures. If you waive these rights, you are givingup an important consumer protection that the State of Georgia has found youshould be provided. If you wish to exercise these rights, please indicatebelow that you want to see the disclosures before agreeing to be aparticipant, then do not agree to become a participant until the disclosureshave been made available to you.

SIGN ONLY ONE OF THE FOLLOWING STATEMENTS:

I wish to see the disclosures required by law before I agree to become a

participant.

_______________________ Date: _______________________

I do not wish to see the disclosures required by law; I understand that I will

not be seeing important information which might affect my decision toparticipate in this multilevel distribution company.

_______________________ Date: _______________________

(d) Every multilevel distribution company shall maintain on file all of the statements as

described in subsection (c) of this Code section for a period of two years from the date suchstatements are signed.

(e) Every seller shall include the following regarding each officer, director, principal, and owner

in the disclosures required by subsection (b) of Code Section 10-1-411 and by subsection (a) ofCode Section 10-1-413:

(1) Whether he or she has at any time during the previous seven fiscal years been convicted of a

felony or pleaded nolo contendere to a felony charge if the felony involved fraud, including

violation of any franchise law, unfair or deceptive acts or practices law, business opportunitylaw, multilevel distributing law, or pyramid law; embezzlement; fraudulent conversion;

misappropriation of property; or restraint of trade;

(2) Whether he or she has at any time during the previous seven fiscal years been held liable in a

civil action resulting in a final judgment or has settled out of court any civil action or is a party toany civil action involving fraud, including violation of any franchise law, unfair or deceptive acts



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or practices law, business opportunity law, multilevel distributing law, or pyramid law;

embezzlement; fraudulent conversion; misappropriation of property; or restraint of trade;

(3) Whether he or she is currently subject to any state or federal agency or court injunctive or

restrictive order or is a party to a proceeding currently pending in which such an order is sought

relating to fraud, including violation of any franchise law, unfair or deceptive acts or practiceslaw, business opportunity law, multilevel distributing law, or pyramid law; embezzlement;fraudulent conversion; misappropriation of property; or restraint of trade; and

(4) Whether he or she has at any time during the previous seven fiscal years filed in bankruptcy,

been adjudged bankrupt, or been reorganized due to insolvency or has been a principal, director,

executive officer, or partner of any other person that has so filed or was so adjudged or

reorganized during or within one year after the period that such person held such position in suchother person.

(f) The disclosures required under subsection (e) of this Code section shall include any of the

following which are applicable:

(1) The identity and location of the court or agency;

(2) The date of conviction, judgment, or decision;

(3) The penalty imposed;

(4) The damages assessed;

(5) The terms of settlement or the terms of the order and the date, nature, and issuer of each such

order or ruling; and

(6) The name and principal business address of any other person which filed, was adjudged, or

was reorganized in bankruptcy.

10-1-414.

Sellers shall not:

(1) Represent that a business opportunity or multilevel program provides income or earningpotential of any kind unless the seller has documented data to substantiate the claims of income

or earning potential, which data shall be furnished to the administrator or his representativesupon request;

(2) Use the trademark, service mark, trade name, logotype, advertising, or other commercial

symbol of any business which does not either control the ownership interest in the seller or

accept responsibility for all representations made by the seller unless it is clear from thecircumstances that the owner of the commercial symbol is not involved in the businessopportunity or multilevel distribution company; or



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(3) Make or authorize the making of any reference to its compliance with this part in any

advertisement or other contract with purchasers or participants or in any manner represent,explicitly or implicitly, that the State of Georgia or any department, agency, officer, or employee

has reviewed, approved, sanctioned, or endorsed a business opportunity or multilevel program.

10-1-415.

(a) Every business opportunity or multilevel distribution contract shall be in writing, and a copy

shall be given to the purchaser or participant at the time he or she signs the contract.

(b) Every contract or any material incorporated therein by reference shall include the following:

(1) The terms and conditions of payment, including but not limited to compensation paid to a

participant by the company and any payments to be made by the participant to the company

within the first six months of the agreement;

(2) A full and detailed description of the acts or services that the seller undertakes to perform forthe purchaser or participant, including a specific description of the product or service being

marketed;

(3) The seller's principal business address. For purposes of this paragraph, a post office box shall

not be considered a principal place of business; and

(4) The approximate delivery date of any products, equipment, supplies, or services that the

seller is to deliver to the purchaser or participant

(c) In addition to the information required in subsection (b) of this Code section, every multilevel

distribution contract, or an addendum thereto, shall contain the following:

(1) If training of any type is promised by the seller or company, a complete description of the

training and the length of the training;

(2) If a bond is required under Code Section 10-1-412, the following statement, with all blanks

properly filled:

"As required by Georgia law, the company has secured a bond or established

a trust account for your protection. This bond or trust account can beidentified as # ______________ in the name of ______________, providedby the following bonding company or trust company:_______________________, which is located at the following address:_______________________ in the City of _______________________,State of _______________."



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(3) A participant in a multilevel marketing plan has a right to cancel at any time, regardless of

reason. If a participant will be under an obligation to make any payment after the agreement has

been entered into, a statement in ten-point boldface type as follows must appear in the contract or

an addendum thereto:

"A participant in this multilevel marketing plan has a right to cancel at any time, regardless of

reason. Cancellation must be submitted in writing to the company at its principal businessaddress."

(4) A description of any cancellation rights.

(d) Cancellation rights pursuant to paragraph (4) of subsection (c) of this Code section must, at a

minimum, provide the following:

(1) If the participant has purchased products or paid for administrative services while the contract

of participation was in effect, the seller shall repurchase all unencumbered products, sales aids,literature, and promotional items which are in a reasonably resalable or reusable condition and

which were acquired by the participant from the seller; such repurchase shall be at a price not

less than 90 percent of the original net cost to the participant of the goods being returned. For

purposes of this paragraph, "original net cost" means the amount actually paid by the participantfor the goods, less any consideration received by the participant for purchase of the goods whichis attributable to the specific goods now being returned. Goods shall be deemed "resalable orreusable" if the goods are in an unused, commercially resalable condition at the time the goodsare returned to the seller. Goods which are no longer marketed by a company shall be deemed"resalable or reusable" if the goods are in an unused, commercially resalable condition and arereturned to the seller within one year from the date the company discontinued marketing the

goods; provided, however, that goods which are no longer marketed by a multilevel distributioncompany shall not be deemed "resalable or reusable" if the goods are sold to participants as

nonreturnable, discontinued, or seasonal items and the nonreturnable, discontinued, or seasonalnature of the goods was clearly disclosed to the participant seeking to return the goods prior tothe purchase of the goods by the participant. Notwithstanding anything to the contrary containedin this paragraph, a multilevel distribution company may not assert that any more than 15 percentof its total yearly sales per calendar year to participants in dollars are from nonreturnable,discontinued, or seasonal items;

(2) The repayment of all administrative fees or consideration paid for other services shall be at

not less than 90 percent of the costs to the participant of such fees or services and shall reflect all

other administrative services that have not, at the time of termination, been provided to theparticipant; and

(3) The participant may be held responsible for all shipping expenses incurred in returning sales

aids or products to the company but only if such responsibility of a canceling participant isdisclosed in the written description of the cancellation rights.

10-1-416.



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(a) Each seller numbering among its participants or purchasers any resident of this state, which

has agreements made in this state, or which has its principal place of business in this state, shallirrevocably appoint the Secretary of State of this state as its agent for service of process for any

alleged violation of this part. Compliance with this Code section shall not in and of itself subject

any seller to the provisions or consequences of any other statute of this state.

(b) Any seller which numbers among its participants or purchasers any resident of this state,

which has agreements made in this state, or which has its principal place of business in this state,

and which fails to comply with subsection (a) of this Code section shall be deemed to have

thereby irrevocably appointed the Secretary of State as its agent for service of process for any

alleged violation of this part.

(c) Service shall be made by delivering to and leaving with the Secretary of State duplicatecopies of such process, notice, or demand, together with an affidavit giving the last known post

office address of such seller; and such service shall be sufficient if notice thereof and a copy of

the process, notice, or demand are forwarded by registered mail or certified mail addressed to

such seller at the address given in such affidavit.

10-1-417.

(a) If a business opportunity seller or multilevel distribution company uses any untrue or

misleading statements; or fails to comply with Code Section 10-1-411; or fails to deliver theequipment, supplies, or products necessary to begin substantial operation within 45 days of the

delivery date stated in the contract; or if the business opportunity seller or multilevel distribution

company does not comply with the requirements of Code Sections 10-1-410 through 10-1-416,

then, within one year of the date of the contract, upon written notice to the seller, the purchaseror participant may void the contract and shall be entitled to receive from the seller all sums paid

to the seller. Upon receipt of such sums, the purchaser or participant shall make available to theseller at the purchaser's or participant's address or at the places at which they are located at thetime notice is given, all products, equipment, or supplies received by the purchaser or participant.However, the purchaser or participant shall not be entitled to unjust enrichment by exercising theremedies provided for in this subsection.

(b) The violation of any provision of this part shall constitute an unfair or deceptive act or

practice in the conduct of a consumer act or practice or consumer transactions under Part 2 ofthis article, the "Fair Business Practices Act of 1975," and shall authorize an affected participantor purchaser to seek the remedies provided for in Code Section 10-1-399 and in subsection (a) ofCode Section 10-1-417.

(c) Nothing contained in this part shall be construed to limit, modify, or repeal any provisions of

Chapter 5 of this title, the "Georgia Securities Act of 1973," including, but not limited to, thedefinition of the term "security" as contained in paragraph (26) of subsection (a) of Code Section10-5-2.

(d) Any person who fails to comply with this part shall be guilty of a misdemeanor of a high and

aggravated nature. In addition thereto, if the violator is a corporation, each of its officers and



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directors may be subjected to a like penalty; and, if the violator is a sole proprietorship, the

owner thereof may be subjected to a like penalty; and, if the violator is a partnership, each of thepartners may be subjected to a like penalty, provided that no person shall be subjected to a like

penalty if the person did not have actual knowledge of the acts violating this part.



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GUAM


32201. Deceptive Trade Practices Unlawful.

(a) False, misleading, or deceptive acts or practices, including, but not limited to those listed in

this chapter, are hereby declared unlawful and are subject to action by the Attorney General orany person as permitted pursuant to this chapter or other provisions of Guam law. A violationconsisting of any act prohibited by this title is in itself actionable, and may be the basis fordamages, rescission, or equitable relief. The provisions of this chapter are to be liberallyconstrued in favor of the consumer, balanced with substantial justice, and violation of suchprovisions may be raised as a claim, defense, crossclaim or counterclaim.

(b) The term false, misleading, or deceptive acts or practices includes, but is not limited to, the

following acts by any person or merchant, which acts are hereby prohibited and declared illegaland contrary to public policy if committed by any person or merchant:

(15) Selling or offering to sell, either directly or associated with the sale of goods or services, aright of participation in a multi-level distributorship. As used herein, multi-level distributorship

means a sales plan for the distribution of goods or services in which promises of rebate orpayment are made to individuals, conditioned upon those individuals recommending or securingadditional individuals to assume positions in the sales operation, and where the rebate orpayment is not exclusively conditioned on or in relation to proceeds from the retail sales ofgoods, provided that nothing herein shall prohibit the sale of a sales or presentation kit toprospective salespersons for Five Hundred Dollars ($500) or less; provided, that the kit is sold atnot more than the actual cost to the seller, that no commission is paid on the sale of the kit, andthat a full refund (less any demonstration products used) is offered to the buyer for thirty (30)days after the delivery of the kit if the buyer returns the kit to the seller, whether or not the kit is

used; and provided further that if the kit was purchased on Guam the kit can be returned to alocation in Guam and the refund immediately collected thereat and if purchased off-island can bereturned to the place of purchase for the refund;

SOURCE: Subsection (c)(21) added by P.L. 22-34:1 (9/27/93).



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HAWAII


[480-3.3] Endless chain schemes. A person engages in an unfair method of competition and an

unfair or deceptive act or practice within the meaning of section 480-2 when, in the conduct of

any trade or commerce, the person contrives, prepares, sets up, proposes, or operates any endless

chain scheme. As used in this section, an endless chain scheme means any scheme for thedisposal or distribution of property whereby a participant pays a valuable consideration for thechance to receive compensation for introducing one or more additional persons into participationin the scheme, or for the chance to receive compensation when a person introduced by theparticipant introduces a new participant. Compensation, as used in this section, does not mean or

include payments based upon sales made to persons who are not participants in the scheme andwho are not purchasing in order to participate in the scheme. [L 1970, c 28, 1; gen ch 1985].



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Idaho


Idaho Unlawful Sales Referral Practices: The State of Idaho Legislative Code contains a

prohibition against unfair methods of competition and unfair or deceptive acts or practices in theconduct of trade or business. One such "unlawful practice" listed in the Idaho Consumer

Protection Act is the practice of "referral selling." Idaho law defines this unlawful practice asfollows:

48-603. UNFAIR METHODS AND PRACTICES

(15) Promising or offering to pay, any compensation or reward in consideration of his giving

to the seller or lessor the names of prospective purchasers or lessees, or otherwise aiding the

seller or lessor in making a sale or lease to another person, if the earning of the rebate, discountor other value is contingent upon the occurrence of an event subsequent to the time the buyer orlessee agrees to buy or lease

Idaho Pyramid Statute

TITLE 18

CRIMES AND PUNISHMENTSCHAPTER 31FALSE PRETENSES, CHEATS AND MISREPRESENTATIONS

18-3101. PYRAMID PROMOTIONAL SCHEMES PROHIBITED -- PENALTIES -- SALE OF

INTEREST VOIDABLE -- SCOPE OF REMEDY.

(1) It is illegal and prohibited for any person, or any agent or employee thereof, to establish,

promote, offer, operate, advertise or grant participation in any pyramid promotional scheme.

(2) As used in this section:

(a) "Appropriate inventory repurchase program" means a program by which a plan or operation

repurchases, upon request at the termination of a participant's business relationship with the planor operation and based upon commercially reasonable terms, current and marketable inventory

purchased and maintained by the participant for resale, use or consumption, provided such planor operation clearly describes the program in its recruiting literature, sales manual, or contractswith participants, including the manner in which the repurchase is exercised and disclosure ofany inventory that is not eligible for repurchase under the program.

(b) "Commercially reasonable terms" means the repurchase of current and marketable inventorywithin twelve (12) months from the date of original purchase at not less than ninety percent(90%) of the original net cost to the participant, less appropriate set-offs and legal claims, if any.In the case of service products, the repurchase of such service products shall be on a pro ratabasis, unless clearly disclosed otherwise to the participant, in order to qualify as "commerciallyreasonable terms."(c) "Compensation" means a payment of any money, thing of value, or financial benefit.



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(d) "Consideration" means a payment of any money, or the purchase of goods, services, or

intangible property but shall not include:

1. The purchase of goods or services furnished at cost to be used in making sales and not for

resale.

2. Time and effort spent in pursuit of sales or recruiting activities.

(e) "Current and marketable" includes inventory that, in the case of consumable or durable

goods, is unopened, unused and within its commercially reasonable use of shelf-life period. Inthe case of services and intangible property, including internet sites, "current and marketable"means the unexpired portion of any contract or agreement. The term "current and marketable"does not include inventory that has been clearly described to the participant prior to purchase as aseasonal, discontinued, or special promotion product not subject to the plan or operation'sinventory repurchase program.(f) "Inventory" includes both goods and services, including company-produced promotionalmaterials, sales aids and sales kits that the plan or operation requires independent salespersons to

purchase.(g) "Inventory loading" means that the plan or operation requires or encourages its independentsalespersons to purchase inventory in an amount that unreasonably exceeds that which thesalesperson can expect to resell for ultimate consumption, or to use or consume, in a reasonabletime period.(h) "Participant" means a natural person who joins a plan or operation.

(i) "Person" means a natural person, partnership, corporation, trust, estate, business trust, jointventure, unincorporated association, or any other legal or commercial entity.(j) "Promote" means to contrive, prepare, establish, plan, operate, advertise or otherwise induceor attempt to induce another person to be a participant.(k) "Pyramid promotional scheme" means any plan or operation in which a participant gives

consideration for the right to receive compensation that is derived primarily from the recruitmentof other persons as participants in the plan or operation rather than from the sales of goods,services or intangible property to participants or by participants to others.

(3) A limitation as to the number of persons who may participate, or the presence of additionalconditions affecting eligibility, or upon payment of anything of value by a person whereby theperson obtains any other property in addition to the right to receive consideration, does notchange the identity of the scheme as a pyramid promotional scheme.

(4) Any person, or any agent or employee thereof who willfully and knowingly promotes, offers,

advertises, or grants participation in a pyramid promotional scheme shall be guilty of a felony.

(5) All pyramid promotional schemes offered by the same person, or agents or employeesthereof, or any person controlled by or affiliated with such person, for the same type ofconsideration, at substantially the same period of time and for the same general purpose, shall bedeemed to be one (1) integrated pyramid promotional scheme, even though such pyramidpromotional schemes may be given different names or other designations.



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(6) Nothing in this section or in any rule promulgated pursuant to this section shall be construed

to prohibit a plan or operation, or to define such plan or operation as a pyramid promotional

scheme, based upon the fact that participants in the plan or operation give consideration in returnfor the right to receive compensation based upon purchases of goods, services or intangible

property by participants for personal use, consumption or resale, provided the plan or operation

implements an appropriate inventory repurchase program and does not promote inventoryloading.

(7) Any violation of this section shall also be deemed an unfair and deceptive practice in

violation of the Idaho consumer protection act. Any person aggrieved by a violation of thissection can recover monetary damages pursuant to the Idaho consumer protection act.

(8) The rights and remedies that are granted under the provisions of this section to purchasers in

pyramid promotional schemes are independent of and in addition to any other right or remedyavailable to them in law or equity, and nothing contained herein shall be construed to diminish orabrogate any such right or remedy.



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ILLINOIS


Illinois consumer protection law defines a "pyramid sales scheme" as: "any plan or operation

whereby a person, in exchange for money or other thing of value, acquires the opportunity to

receive a benefit or thing of value, which is primarily based upon the inducement of additional

persons, by himself or others, regardless of number, to participate in the same plan or operationand is not primarily contingent on the volume or quantity of goods, services, or other property

sold or distributed or to be sold or distributed to persons for purposes of resale to consumers."Illinois Compiled Statutes Ch. 121 , Par. 262A. Pyramid schemes also violate the IllinoisConsumer Fraud and Deceptive Business Practices Act which is enforced by the Consumer

Fraud Bureau of the Office of the Illinois Attorney General. The law allows the Attorney Generalto ask the court to impose a civil penalty in the amount of $50,000 per violation.



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INDIANA

Indiana Code


IC 24-5-0.5-2 . As used in this chapter:

(3) "Supplier" means:

(B) a person who contrives, prepares, sets up, operates, publicizes by means of advertisements,

or promotes a pyramid promotional scheme.

(8) "Pyramid promotional scheme" means any program utilizing a pyramid or chain process by

which a participant in the program gives a valuable consideration exceeding one hundred dollars($100) for the opportunity or right to receive compensation or other things of value in return for

inducing other persons to become participants for the purpose of gaining new participants in theprogram. The term does not include ordinary sales of goods or services to persons who are not

purchasing in order to participate in such a scheme.

(9) "Promoting a pyramid promotional scheme" means: (A) inducing or attempting to induce one

(1) or more other persons to become participants in a pyramid promotional scheme; or

(B) assisting another in promoting a pyramid promotional scheme.

IC 24-5-0.5-3 . (a) The following acts or representations as to the subject matter of a consumer

transaction, made either orally or in writing by a supplier, are deceptive acts:

(9) That the consumer will receive a rebate, discount, or other benefit as an inducement for

entering into a sale or lease in return for giving the supplier the names of prospective consumersor otherwise helping the supplier to enter into other consumer transactions, if earning the benefit,rebate, or discount is contingent upon the occurrence of an event subsequent to the time theconsumer agrees to the purchase or lease.



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IOWA

714.16 Consumer frauds.

1. Definitions:


a. The term "advertisement" includes the attempt by publication, dissemination, solicitation or

circulation to induce directly or indirectly any person to enter into any obligation or acquire any

title or interest in any merchandise;

.

2. a. The act, use or employment by a person of an unfair practice, deception, fraud, false

pretense, false promise, or misrepresentation, or the concealment, suppression, or omission of a

material fact with intent that others rely upon the concealment, suppression, or omission, in

connection with the lease, sale, or advertisement of any merchandise or the solicitation of

contributions for charitable purposes, whether or not a person has in fact been misled, deceived,or damaged, is an unlawful practice.

It is deceptive advertising within the meaning of this section for a person to represent in

connection with the lease, sale, or advertisement of any merchandise that the advertised

merchandise has certain performance characteristics, accessories, uses, or benefits or that certain

services are performed on behalf of clients or customers of that person if, at the time of the

representation, no reasonable basis for the claim existed. The burden is on the person making therepresentation to demonstrate that a reasonable basis for the claim existed.

..

b. The advertisement for sale, lease or rent, or the actual sale, lease, or rental of any merchandise

at a price or with a rebate or payment or other consideration to the purchaser which is contingentupon the procurement of prospective customers provided by the purchaser, or the procurement ofsales, leases, or rentals to persons suggested by the purchaser, is declared to be an unlawfulpractice rendering any obligation incurred by the buyer in connection therewith, completely voidand a nullity. The rights and obligations of any contract relating to such contingent price, rebate,or payment shall be interdependent and inseverable from the rights and obligations relating to thesale, lease, or rental.



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KANSAS


Chapter 21.--CRIMES AND PUNISHMENTS

PART II.--PROHIBITED CONDUCT

Part 2.--Prohibited Conduct

Article 37.--CRIMES AGAINST PROPERTY

21-3762. Establishing, operating, advertising or promoting a pyramid promotional scheme.

(a) As used in this section, "pyramid promotional scheme" means any plan or operation by whicha participant gives consideration for the opportunity to receive compensation which is derivedprimarily from any person's introduction of other persons into participation in the plan oroperation rather than from the sale of goods, services or intangible property by the participant or

other persons introduced into the plan or operation.

(b) Establishing, operating, advertising or promoting a pyramid promotional scheme shall be a

severity level 9, nonperson felony.

(c) A limitation as to the number of persons who may participate or the presence of additional

conditions affecting eligibility for the opportunity to receive compensation under the plan oroperation does not change the identity of the scheme as a pyramid promotional scheme nor is it adefense under this section that a participant, on giving consideration, obtains any goods, servicesor intangible property in addition to the right to receive compensation.

(d) The attorney general, or county attorney or district attorney, or both, may institute criminalaction to prosecute this offense.

(e) This section shall be part of and supplemental to the Kansas criminal code.

Chapter 50.--UNFAIR TRADE AND CONSUMER PROTECTION

Article 6.--CONSUMER PROTECTION

50-626. Deceptive acts and practices.

(a) No supplier shall engage in any deceptive act or practice in connection with a consumer

transaction.



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(b) Deceptive acts and practices include, but are not limited to, the following, each of which is

hereby declared to be a violation of this act, whether or not any consumer has in fact beenmisled:

(1) Representations made knowingly or with reason to know that:

(A) Property or services have sponsorship, approval, accessories, characteristics, ingredients,

uses,

(E) the consumer will receive a rebate, discount or other benefit as an inducement for entering

into a consumer transaction in return for giving the supplier the names of prospective consumersor otherwise helping the supplier to enter into other consumer transactions, if receipt of benefit iscontingent on an event occurring after the consumer enters into the transaction.



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PENALTY

Penalty: 367.990(20)(a)




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LOUISIANA

361. Definitions

As used in this Subpart:


(1) "Compensation" means the payment of money, a thing of value, or any financial benefit.

Compensation does not include:

(a) Payment to participants based upon sales of products purchased for actual use or

consumption, including products used or consumed by participants in the plan.

(b) Payment to participants under reasonable commercial terms.

(2) "Consideration" means the payment of cash or purchase of goods, services, or intangible

property. Consideration does not include:

(a) Purchase of products furnished at cost to be used in making sales and not for resale.

(b) Purchase of products where the seller offers to repurchase the participant's products under

reasonable commercial terms.

(c) Participant's time and effort in pursuit of sales or recruiting activities.

(3) "Participant" means a person who contributes money into a pyramid promotional scheme.

(4) "Person" means an individual, a corporation, a partnership, or any association, or

unincorporated organization.

(5) "Promote" means to contrive, direct, establish, or operate a pyramid promotional scheme.

(6) "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 the

person's introduction of other persons into a 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.

(7) "Reasonable commercial terms" includes repurchase by the seller, at the participant's request,

and upon termination of the business relationship or contract with the seller, of all unencumberedproducts purchased by the participant from the seller within the previous twelve months whichare unused and in commercially resalable condition, provided that repurchase by the seller shall

be for not less than ninety percent of the actual amount paid by the participant to the seller of theproducts, less any consideration received by the participant for purchase of the products whichare being returned. A product shall not be deemed nonresalable solely because the product is no

longer marketed by the seller, unless it is clearly disclosed to the participant at the time of the



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sale that the product is a seasonal, discontinued, or special promotional product, and not subject

to the repurchase obligation.

Acts 1997, No. 379, 1; Acts 2001, No. 837, 1.

362. Promoting pyramid promotional scheme unlawful

No person shall promote a pyramid promotional scheme in Louisiana or cause a pyramid

promotional scheme to be promoted in Louisiana.

Acts 1997, No. 379, 1; Acts 2001, No. 837, 1.

363. Violations; penalties

Whoever promotes a pyramid promotional scheme in Louisiana or causes a pyramid promotional

scheme to be promoted in Louisiana shall be fined not more than ten thousand dollars or

imprisoned, with or without hard labor, for not more than ten years, or both.

Acts 1997, No. 379, 1; Acts 2001, No. 837, 1.



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14-304.

Business Regulation


(a) The Attorney General or a State's Attorney may sue to enjoin, wholly or partly, the activities

of a multilevel distribution company that violate this subtitle.

(b) At least 10 days before seeking injunctive relief, the Attorney General or State's Attorneyshall send written notice of the alleged violation by certified mail to the principal place of

business of the multilevel distribution company.

14-305.

Commercial Law

Any person who willfully violates any provision of this subtitle is guilty of a misdemeanor and,

in addition to the injunctive relief provided for in Title 13, Subtitle 4 of this article, on convictionis subject to a fine of not more than $1,000 or imprisonment of not more than one year or both.

13-304.

Commercial Law

A seller may not use any general referral sales technique, plan, arrangement, or agreement by

which a buyer is induced to purchase merchandise, real property, or intangibles on therepresentation or promise of the seller that if the buyer furnishes to the seller the names of otherprospective buyers of like or identical merchandise, real property, or intangibles, he will receive

a reduction in purchase price by means of a cash rebate, commission, or credit toward balancedue or any other consideration.

233D.

Crimes and Punishments

(a) In this section, the following words have the meanings indicated.

(1) "Compensation" includes payment based on a sale or distribution made to a person who is

either a participant in a plan or operation or who, upon making payment, then has the right to

become a participant.

(2) "Consideration" does not include:

(i) Payment for purchase of goods or services furnished at cost for use in making sales to persons

who are not participants in the scheme and who are not purchasing in order to participate in thescheme;



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(ii) Time or effort spent in pursuit of sales or recruiting activities; or

(iii) The right to receive a discount or rebate based on the purchase or acquisition of goods orservices by a bona fide cooperative buying group or association.

(3) "Promote" means to induce one or more other persons to become a participant.

(4) "Pyramid promotional scheme" means any plan or operation by which a participant givesconsideration for the opportunity to receive compensation to be derived primarily from anyperson's introduction of other persons into participation in the plan or operation rather than fromthe sale of goods, services, or other intangible property by the participant or other personsintroduced into the plan or operation.

(b) A person may not establish, operate, advertise, or promote a pyramid promotional scheme.

(c) A person who violates the provisions of this section is guilty of a misdemeanor and on

conviction is subject to a fine of not more than $10,000 or imprisonment for not more than 1 yearor both.

(d) It is not a defense to a prosecution under this section that:

(1) The plan or operation limits the number of persons who may participate or limits the

eligibility of participants; or

(2) On payment of anything of value by a participant, the participant obtains any other property

in addition to the right to receive compensation.



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MASSACHUSETTS


GENERAL LAWS OF MASSACHUSETTS

Chapter 93: Section 69. Definition; requirements.

Section 69. (a) As used in this section the term "multi-level distribution company" shall mean

any person, firm, corporation or other business entity which distributes for a valuable

consideration, goods or services through independent agents, contractors or distributors, at

different levels, wherein participants in the marketing program may recruit other participants,

and wherein commissions, cross-commissions, bonuses, refunds, discounts, dividends or other

considerations in the marketing program are or may be paid as a result of the sale of such goods

and services or the recruitment, actions or performances of additional participants.

(b) Every multi-level distribution company shall provide in its contract of participation that such

contract may be canceled for any reason at any time by a participant upon notification in writing

to the company of his election to cancel. If the participant has purchased products while thecontract of participation was in effect, all unencumbered products in a resaleable condition thenin the possession of the participant shall be repurchased. The repurchase shall be at a price of not

less than ninety per cent of the original net cost to the participant returning such goods, takinginto account any sales made by or through such participant prior to notification to the company

of the election to cancel.

(c) No multi-level distribution company, nor any participant, shall require participants in its

marketing program to purchase products or services or pay any other consideration in order to

participate in the marketing program unless such products or services are in reasonable quantitiesand unless it agrees: (1) to repurchase all or part of any products which are unencumbered and in

a resaleable condition at a price of not less than ninety per cent of the original net cost to the participant; (2) to repay not less than ninety per cent of the original net cost of any services purchased by the participant; or (3) to refund not less than ninety per cent of any other

consideration paid by the participant in order to participate in the marketing program.

(d) No multi-level distribution company or participant in its marketing program shall: (1) operate

or, directly or indirectly, participate in the operation of any multi-level marketing program

wherein the financial gains to the participants are primarily dependent upon the continued,

successive recruitment of other participants and where retail sales are not required as a conditionprecedent to realization of such financial gains; (2) offer to pay, pay or authorize the payment of

any finder's fee, bonus, refund, override, commission, cross-commission, dividend or other

consideration to any participants in a multi-level marketing program solely for the solicitation orrecruitment of other participants therein; (3) offer to pay, pay or authorize the payment of anyfinder's fee, bonus, refund, override, commission, cross-commission, dividend or otherconsideration to any participants in a multi-level marketing program in connection with the sale

of any product or service unless such participant performs a bona fide and essential supervisory,distributive, selling or soliciting function in the sale or delivery of such product or services to theultimate consumer; or (4) offer to pay, pay or authorize the payment of any finder's fee, bonus,refund, override, commission, cross-commission, dividend or other consideration to any



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participant where payment thereof is or would be dependent on the element of chance

dominating over the skill or judgment of such participant, or where no amount of judgment or

skill exercised by the participant has any appreciable effect upon any finder's fee, bonus, refund,

override, commission, cross-commission, dividend or other consideration which the participant

may receive, or where the participant is without that degree of control over the operation of such

plan as to enable him substantially to affect the amount of finder's fee, bonus, refund, override,commission, cross-commission, dividend or other consideration which he may receive or be

entitled to receive.

(e) Multi-level distribution companies shall not represent, directly or indirectly, that participants

in a multi-level marketing program will earn or receive any stated gross or net amount, or

represent in any manner, the past earnings of participants; provided, however, that a written orverbal description of the manner in which the marketing plan operates shall not, standing alone,constitute a representation of earnings, past or future. Multi-level distribution companies shallnot represent, directly or indirectly, that additional distributors or sales personnel are easy tosecure or retain, or that all or substantially all participants will succeed.

(f) Each multi-level distribution company numbering among its participants any resident of the

commonwealth shall annually file with the attorney general a statement giving notice of this factand designating the state secretary its agent for service of process for any alleged violation of thissection.

(g) Any violation of the provisions of this section shall constitute an unlawful method, act or

practice within the meaning of clause (a) of section two of chapter ninety-three A.



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MINNESOTA

325F.69 Unlawful practices.


Subdivision 1. Fraud, misrepresentation, deceptive practices. The act, use, or employment by any

person of any fraud, false pretense, false promise, misrepresentation, misleading statement ordeceptive practice, with the intent that others rely thereon in connection with the sale of any

merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby,is enjoinable as provided herein.

Subd. 2. Referral and chain referral selling prohibited.

(1) With respect to any sale or lease the seller or lessor may not give or offer a rebate or discount

or otherwise pay or offer to pay value to the buyer or lessee as an inducement for a sale or leasein consideration of the buyer's or lessee's giving to the seller or lessor the names of prospectivepurchasers or lessees, or otherwise aiding the seller or lessor in making a sale or lease to another

person, if the earning of the rebate, discount or other value is contingent upon the occurrence ofan event subsequent to the time the buyer or lessee agrees to buy or lease.

(2) (a) With respect to any sale or lease, it shall be illegal for any seller or lessor to operate or

attempt to operate any plans or operations for the disposal or distribution of property or franchiseor both whereby a participant gives or agrees to give a valuable consideration for the chance toreceive something of value for inducing one or more additional persons to give a valuableconsideration in order to participate in the plan or operation, or for the chance to receive

something of value when a person induced by the participant induces a new participant to givesuch valuable consideration including such plans known as chain referrals, pyramid sales, ormultilevel sales distributorships. (b) The phrase "something of value" as used in paragraph (a)

above, does not mean or include payment based upon sales made to persons who are notpurchasing in order to participate in the prohibited plan or operation.

(3) If a buyer or lessee is induced by a violation of this subdivision to enter into a sale or lease,

the agreement is unenforceable and the buyer or lessee has the option to rescind the agreementwith the seller or lessor and, upon tendering the property received, or what remains of it, obtainfull or in the case of remains, a proportional restitution of all sums paid, or retain the goodsdelivered and the benefit of any services performed without any further obligation to pay forthem.

(4) With respect to a sale or lease in violation of this section an assignee of the rights of the seller

or lessor is subject to all claims and defenses of the buyer or lessee against the seller or lessorarising out of the sale or lease notwithstanding an agreement to the contrary, but the assignee's

liability under this section may not exceed the amount owing to the assignee at the time the claimor defense is asserted against the assignee. Rights of the buyer or lessee under this section canonly be asserted as a matter of defense to or setoff against a claim by the assignee.



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(5) In a sale or lease in violation of this section, the seller or lessor may not take a negotiable

instrument other than a check as evidence of the obligation of the buyer or lessee. A holder is notin good faith if the holder takes a negotiable instrument with notice that it is issued in violationof this section.

(6) Any person who violates any provision of this subdivision shall be guilty of a grossmisdemeanor.

Subd. 3. Advertising media excluded. Sections 325F.68 to 325F.70 shall apply to actions of the

owner, publisher, agent or employee of newspapers, magazines, other printed matter or radio or

television stations or other advertising media used for the publication or dissemination of an

advertisement, only if the owner, publisher, agent, or employee has either knowledge of the

false, misleading or deceptive character of the advertisement or a financial interest in the sale or

distribution of the advertised merchandise.

Subd. 4. Solicitation of money for merchandise not ordered or services not performed. The act,

use, or employment by any person of any solicitation for payment of money by another by anystatement or invoice, or any writing that could reasonably be interpreted as a statement or

invoice, for merchandise not yet ordered or for services not yet performed and not yet ordered,whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable

as provided herein.

Subd. 5. Prohibited going out of business sales. It is illegal for any person to represent falsely

that a sale is a "going out of business sale." Any representation that a sale is a "going out of

business sale" is presumed to be false and illegal under this subdivision, if at that location or

within a relevant market area:

(1) the sale has been represented to be a "going out of business sale" for a period of more than120 days;

(2) the business has increased its inventory for the sale by ordering or purchasing an unusual

amount of merchandise during the sale or during the 90 days before the sale began;

(3) the business, or any of its officers or directors, has advertised any other sale as a "going out

of business sale" during the 120 days before this sale began; or

(4) the sale has continued after a date on which the business has represented, expressly or by

reasonable implication, that the business would terminate.

Any presu

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