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Thread: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

  1. #1
    GlimDropper's Avatar
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    H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    Looks like the DSA is offering another legislative initiative:

    H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    Introduced in House (05/13/2016)



    114th CONGRESS
    2d Session
    H. R. 5230

    To prohibit pyramid promotional schemes, and for other purposes.

    IN THE HOUSE OF REPRESENTATIVES
    May 13, 2016
    Mrs. Blackburn (for herself and Mr. Veasey) introduced the following bill; which was referred to the Committee on Energy and Commerce

    A BILL
    To prohibit pyramid promotional schemes, and for other purposes.
    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

    SECTION 1. Short title.

    This Act may be cited as the “Anti-Pyramid Promotional Scheme Act of 2016”.

    SEC. 2. Prohibition on pyramid promotional schemes.

    (a) In general.—It shall be unlawful for any person to establish, operate, promote or cause to be promoted a pyramid promotional scheme.
    (b) Enforcement by the Federal Trade Commission.—A violation of subsection (a) shall be treated as an unfair or deceptive act or practice in or affecting commerce under section 5 of the Federal Trade Commission Act (15 U.S.C. 45). The Federal Trade Commission shall enforce such subsection in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act.

    SEC. 3. Definitions.

    As used in this Act:

    (1) APPROPRIATE INVENTORY REPURCHASE AGREEMENT.—The term “appropriate inventory purchase agreement” means a program by which a plan or operation repurchases, upon request at the termination of a participant’s business relationship with the plan or operation and based upon commercially reasonable terms, current and marketable inventory purchased and maintained by the participant for resale, use, or consumption, and such plan or operation in its recruiting literature, sales manual, and contracts with participants, including the manner in which the repurchase is exercised, and disclosure of any inventory that is not eligible for repurchase under the program.

    (2) COMMERCIALLY REASONABLE TERMS.—The term “commercially reasonable terms” means the repurchase of current and marketable inventory within 12 months from the date of purchase at not less than 90 percent of the original net cost to the participant, less appropriate set-offs and legal claims, if any.

    (3) COMPENSATION.—The term “compensation” means the payment of any money, thing of value, financial benefits, or position within the plan or operation;

    (4) CONSIDERATION.—The term “consideration”—

    (A) means the payment of money or another thing of value or the purchase of a product, good, service, intangible property; and

    (B) does not include—
    (i) the purchase of a product furnished at cost to be used in making a sale and not for resale; or
    (ii) any time and effort spent in pursuit of sales or recruiting activities.

    (5) CURRENT AND MARKETABLE.—The term “current and marketable”, with respect to inventory—

    (A) means inventory that—
    (i) in the case of consumable or durable goods, is unopened, unused, and within its commercially reasonable use or shelf-life period; and
    (ii) in the case services and intangible property, including Internet sites, represents the unexpired portion of any contract or agreement; and

    (B) does not include inventory that has been clearly described to the participant prior to purchase as discounted, seasonal, special promotion item, or not subject to the plan or operation’s inventory repurchase program.

    (6) INVENTORY.—The term “inventory” means both goods and services, including company produced promotional material, sales aids, and sales kits that the plan or operation requires participants to purchase.

    (7) INVENTORY LOADING.—The term “inventory loading” means that the plan or operation requires or encourages its participants to purchase inventory in an amount that unreasonably exceeds that which the participant can expect to resell to ultimate users, or to use or consume, in a reasonable period of time.

    (8) PARTICIPANT.—The term “participant” means a person who joins the plan or operation.

    (9) PYRAMID PROMOTIONAL SCHEME.—The term “pyramid promotional scheme” means a plan or operation by which a person gives consideration to a participant for the right to receive compensation that is derived primarily from a participant’s introduction of another person into the plan or operation rather than from the sale of products to ultimate users.

    (10) ULTIMATE USER.—The term “ultimate user” means a non-participant in the plan or operation, or a participant who purchases reasonable amounts of products, goods, services, or intangible property for personal use and whose purchase is not made solely for purposes of qualifying for increased compensation.

    SEC. 4. Limitations.

    Nothing in this Act shall be construed to—

    (1) limit the authority of any Federal official from proceeding against pyramid promotional schemes for other violations of Federal law, including the Federal Trade Commission Act;

    (2) allow for a defense to an enforcement action under section 2 of this Act that the alleged pyramid promotional scheme involved both a franchise to sell a product and the authority to sell additional franchises if the emphasis of the alleged pyramid promotional scheme is on the sale of additional franchises; or

    (3) allow for a defense to an enforcement action under section 2 of this Act that the alleged pyramid promotional scheme included repurchase agreement inventory loading programs if the emphasis of the alleged pyramid promotional scheme is on the sale of additional franchises.
    First impression, this is the "give us our Vemma back" bill. I do not see where this bill adds any additional clarity on fundamental industry issues and it makes 100% internal affiliate consumption perfectly legal so long as there are inventory buy back provisions and affiliate purchases are not "solely for purposes of qualifying for increased compensation." If this bill is enacted I'm pretty sure MLMs can stop even pretending to have customers who are not also affiliates which of course means the difference between legal MLMs and actual pyramid schemes will be purely theoretical in nature.

    This bill's sponsors are Marsha Blackburn of Tennessee and Marc Veasey of Texas and by what I am sure is just like a total friggen coincidence Ms. Blackburn and Mr. Veasey are the heads of the DSA's pet Direct Selling Caucus. This is a bought and paid for effort, it couldn't matter in the least that the overwhelming majority of MLM affiliates lose money, in fact if this bill is enacted that percentage will surely increase, the DSA is trying to prevent another one of their company owners from becoming the next BK Boreyko.

    They could at least be honest about this, name the bill the Legalize Product Based Pyramid Schemes Act of 2016, or perhaps the "Customers, We Don't Need No Stinking Customers" bill.

    Once again, the real problem here is that the DSA has money to throw at legislators to advance the agenda of the company owners and the very small handful of people who profit outrageously at the expense of the public at large while there is no well funded and organized consumer advocacy group to counter them. In short, we have the best government that money can buy.
    So your prophets of finance have fallen on their collective proverbial face, and you hear muffled voices calling: Welcome to the human race.
    You made a killing dealing real estate at NASA selling cemetery plots in outer space til some falling coffins crashed upon your doorstep: Welcome to the human race.

    Open up your heart...

    Welcome to RealScam.com.

  2. #2
    laidback's Avatar
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    DAMN!!! It's bad enough having to deal with the SOB's that promote mlm crap, now we have crooked politicians supporting them!
    It seems like in this "industry" common sense is not all that common!

  3. #3
    ProfHenryHiggins is offline Elite Scambuster
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    All right, which MLM programmes are these two political figures members of?
    If you are in Prosper With Integrity, and do not like that your personal information has been published here, please talk to these good people: http://www.attorneygeneral.gov http://www.ic3.gov http://www.fbi.gov

  4. #4
    laidback's Avatar
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    Quote Originally Posted by profhenryhiggins View Post
    all right, which mlm programmes are these two political figures members of?
    exactly!!!
    It seems like in this "industry" common sense is not all that common!

  5. #5
    Char's Avatar
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    So what can we do to oppose this? Or is it too late?
    "the MLM emperor "has NO CLOTHES". Pointing out particular freckles on the emperor's hiney is not necessary. The man is stark naked, for crying out loud." - http://www.vandruff.com/mlm_FAQ.html

  6. #6
    littleroundman is offline Administrator
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    The only thing necessary for the triumph of evil is for good men to do nothing

  7. #7
    Luzer is offline Senior Member
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016


  8. #8
    Whip's Avatar
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    this would allow ponzi schemes to run rampant.
    Haven't lost any money to online scams.......results are typical.

  9. #9
    Luzer is offline Senior Member
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    Quote Originally Posted by Whip View Post
    this would allow ponzi schemes to run rampant.
    Yes, product based pyramid schemes would be legal. Herbalife and Scamway would live happily ever after.

    Hopefully this bill never gains any traction.

    If it passes, there's no need for the FTC anymore.

  10. #10
    Bestbud is offline Senior Scambuster
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    Re: H.R.5230 - Anti-Pyramid Promotional Scheme Act of 2016

    WHY THIS ANTI-PYRAMID SCHEME BILL IS OUTRAGEOUSLY WRONG FOR CONSUMERS

    https://www.truthinadvertising.org/why-hr-5230-is-wrong

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