HB 1293

CS

CHAMBER ACTION

2	The Committee on Commerce recommends the following:
3
4	Committee Substitute
5	Remove the entire bill and insert:
6	A bill to be entitled
7	An act relating to pyramid sales schemes; amending s.
8	849.091, F.S.; deleting a provision declaring pyramid
9	sales schemes to be a lottery and providing a criminal
10	penalty for participating in such schemes; creating s.
11	849.09105, F.S.; providing definitions; prohibiting
12	establishing, promoting, operating, or participating in
13	pyramid promotional schemes; providing limitations;
14	providing construction; preserving the Attorney General's
15	authority to bring certain actions; providing that
16	violations of this act are also violations of part II of
17	chapter 501; providing criminal penalties; providing an
18	effective date.
19
20	Be It Enacted by the Legislature of the State of Florida:
21
22	Section 1.  Section 849.091, Florida Statutes, is amended
23	to read:
24	849.091  Chain letters, pyramid clubs, etc., declared a
25	lottery; prohibited; penalties.--
26	(1)  The organization of any chain letter club, pyramid
27	club, or other group organized or brought together under any
28	plan or device whereby fees or dues or anything of material
29	value to be paid or given by members thereof are to be paid or
30	given to any other member thereof, which plan or device includes
31	any provision for the increase in such membership through a
32	chain process of new members securing other new members and
33	thereby advancing themselves in the group to a position where
34	such members in turn receive fees, dues, or things of material
35	value from other members, is hereby declared to be a lottery,
36	and whoever shall participate in any such lottery by becoming a
37	member of, or affiliating with, any such group or organization
38	or who shall solicit any person for membership or affiliation in
39	any such group or organization commits a misdemeanor of the
40	first degree, punishable as provided in s. 775.082 or s.
41	775.083.
42	(2)  A "pyramid sales scheme," which is any sales or
43	marketing plan or operation whereby a person pays a
44	consideration of any kind, or makes an investment of any kind,
45	in excess of $100 and acquires the opportunity to receive a
46	benefit or thing of value which is not primarily contingent on
47	the volume or quantity of goods, services, or other property
48	sold in bona fide sales to consumers, and which is related to
49	the inducement of additional persons, by himself or herself or
50	others, regardless of number, to participate in the same sales
51	or marketing plan or operation, is hereby declared to be a
52	lottery, and whoever shall participate in any such lottery by
53	becoming a member of or affiliating with, any such group or
54	organization or who shall solicit any person for membership or
55	affiliation in any such group or organization commits a
56	misdemeanor of the first degree, punishable as provided in s.
57	775.082 or s. 775.083. For purposes of this subsection, the term
58	"consideration" and the term "investment" do not include the
59	purchase of goods or services furnished at cost for use in
60	making sales, but not for resale, or time and effort spent in
61	the pursuit of sales or recruiting activities.
62	Section 2.  Section 849.09105, Florida Statutes, is created
63	to read:
64	849.09105  Pyramid promotional schemes prohibited;
65	penalties.--
66	(1)  For purposes of this section:
67	(a)  "Compensation" means a payment of any money, thing of
68	value, or financial benefit conferred in return for inducing
69	another person to participate in a pyramid promotional scheme.
70	(b)  "Consideration" means the payment of cash or the
71	purchase of goods, services, or intangible property. The term
72	does not include the purchase of goods or services furnished at
73	cost to be used in making sales and not for resale, or time and
74	effort spent in pursuit of sales or recruiting activities.
75	(c)  "Inventory" includes both goods and services,
76	including company-produced promotional materials, sales aids,
77	and sales kits that the plan or operation requires independent
78	salespersons to purchase.
79	(d)  "Promote" means contrive, prepare, establish, plan,
80	operate, advertise, or otherwise induce or attempt to induce
81	another person to participate in a pyramid promotional scheme,
82	including a pyramid promotional scheme run through the Internet,
83	e-mail, or other electronic communications.
84	(e)  "Pyramid promotional scheme" means any plan or
85	operation by which a person gives consideration for the
86	opportunity to receive compensation that is derived primarily
87	from the introduction of other persons into the plan or
88	operation rather than from the sale and consumption of goods,
89	services, or intangible property by a participant or other
90	persons introduced into the plan or operation. The term includes
91	any plan or operation under which the number of persons who may
92	participate is limited either expressly or by the application of
93	conditions affecting the eligibility of a person to receive
94	compensation under the plan or operation, or any plan or
95	operation under which a person, on giving consideration, obtains
96	any goods, services, or intangible property in addition to the
97	right to receive compensation.
98	(2)  No person may establish, promote, operate, or
99	participate in any pyramid promotional scheme. A limitation as
100	to the number of persons who may participate in or the presence
101	of additional conditions affecting eligibility for the
102	opportunity to receive compensation under a plan does not change
103	the identity of the plan as a pyramid promotional scheme. It is
104	not a defense under this section that a person, on giving
105	consideration, obtains goods, services, or intangible property
106	in addition to the right to receive compensation.
107	(3)  Nothing in this section may be construed to prohibit a
108	plan or operation, or to define a plan or operation as a pyramid
109	promotional scheme, based on the fact that participants in the
110	plan or operation give consideration in return for the right to
111	receive compensation based upon purchases of goods, services, or
112	intangible property by participants for personal use,
113	consumption, or resale so long as the plan or operation:
114	(a)  Does not require, encourage, promote, or induce its
115	independent salespersons to purchase inventory in an amount
116	which exceeds that which the salesperson can expect to resell
117	for ultimate consumption or consume in a reasonable time period,
118	or both.
119	(b)  Provides a program to repurchase, upon request and
120	upon commercially reasonable terms, when a salesperson's
121	business relationship with the plan or operation ends, current
122	and marketable inventory in the possession of the salesperson
123	that was purchased by the salesperson for resale. Any such plan
124	or operation shall clearly describe such program in its
125	recruiting literature, sales manual, or contract with
126	independent salespersons, including the disclosure of any
127	inventory that is not eligible for repurchase under the program.
128	For purposes of this paragraph, the term "commercially
129	reasonable" means subject to repurchase within 12 months after
130	the date of purchase at not less than 90 percent of the original
131	net cost, less appropriate set offs and legal claims, if any.
132	Current and marketable inventory excludes inventory that:
133	1.  Is no longer within its commercially reasonable use or
134	shelf-life period;
135	2.  That was clearly described to salespersons prior to
136	purchase as seasonal, discontinued, or special promotion
137	products not subject to the plan or operation's inventory
138	repurchase program; or
139	3.  Has been used or opened.
140	(4)  The provisions of this section do not preclude,
141	preempt, or prohibit the Attorney General from proceeding
142	against any plan, operation, or scheme or any person involved
143	with such plan, operation, or scheme under any other provision
144	of law.
145	(5)  Any violation of this section constitutes an unfair or
146	deceptive trade practice within the meaning of s. 501.204 and
147	may be the basis for a civil or administrative action by an
148	enforcing authority pursuant to part II of chapter 501.
149	(6)(a)  Any person who establishes, promotes, or operates a
150	pyramid promotional scheme commits a felony of the third degree,
151	punishable as provided in s. 775.082 or s. 775.083.
152	(b)  Any person who participates in a pyramid promotional
153	scheme commits a misdemeanor of the first degree, punishable as
154	provided in s. 775.082 or s. 775.083.
155	Section 3.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.