HB 0973

1	A bill to be entitled
2	An act relating to pyramid promotional schemes; amending
3	s. 849.091, F.S.; deleting a provision declaring pyramid
4	sales schemes to be a lottery and providing a criminal
5	penalty for participating in such schemes; creating s.
6	849.09105, F.S.; providing definitions; prohibiting
7	establishing, promoting, operating, or participating in
8	pyramid promotional schemes; providing limitations;
9	providing construction; preserving the Attorney General's
10	authority to bring certain actions; authorizing the
11	Attorney General to issue certain orders, bring certain
12	actions, and impose certain civil penalties; requiring
13	notification of persons named in certain orders to a right
14	to a hearing; providing for waiver of such right under
15	certain circumstances; providing requirements for such
16	orders; providing for granting certain injunctions,
17	restraining orders, or writs of mandamus under certain
18	circumstances; providing for appointment of a receiver or
19	conservator for certain purposes; authorizing a court to
20	enter certain additional orders for certain purposes;
21	prohibiting a court from requiring the Attorney General to
22	post a bond; requiring the Attorney General to collect
23	certain costs and attorney fees in addition to fines and
24	penalties; providing criminal penalties; providing an
25	effective date.
26
27	Be It Enacted by the Legislature of the State of Florida:
28
29	Section 1.  Section 849.091, Florida Statutes, is amended
30	to read:
31	849.091  Chain letters, pyramid clubs, etc., declared a
32	lottery; prohibited; penalties.--
33	(1)  The organization of any chain letter club, pyramid
34	club, or other group organized or brought together under any
35	plan or device whereby fees or dues or anything of material
36	value to be paid or given by members thereof are to be paid or
37	given to any other member thereof, which plan or device includes
38	any provision for the increase in such membership through a
39	chain process of new members securing other new members and
40	thereby advancing themselves in the group to a position where
41	such members in turn receive fees, dues, or things of material
42	value from other members, is hereby declared to be a lottery,
43	and whoever shall participate in any such lottery by becoming a
44	member of, or affiliating with, any such group or organization
45	or who shall solicit any person for membership or affiliation in
46	any such group or organization commits a misdemeanor of the
47	first degree, punishable as provided in s. 775.082 or s.
48	775.083.
49	(2)  A "pyramid sales scheme," which is any sales or
50	marketing plan or operation whereby a person pays a
51	consideration of any kind, or makes an investment of any kind,
52	in excess of $100 and acquires the opportunity to receive a
53	benefit or thing of value which is not primarily contingent on
54	the volume or quantity of goods, services, or other property
55	sold in bona fide sales to consumers, and which is related to
56	the inducement of additional persons, by himself or herself or
57	others, regardless of number, to participate in the same sales
58	or marketing plan or operation, is hereby declared to be a
59	lottery, and whoever shall participate in any such lottery by
60	becoming a member of or affiliating with, any such group or
61	organization or who shall solicit any person for membership or
62	affiliation in any such group or organization commits a
63	misdemeanor of the first degree, punishable as provided in s.
64	775.082 or s. 775.083. For purposes of this subsection, the term
65	"consideration" and the term "investment" do not include the
66	purchase of goods or services furnished at cost for use in
67	making sales, but not for resale, or time and effort spent in
68	the pursuit of sales or recruiting activities.
69	Section 2.  Section 849.09105, Florida Statutes, is created
70	to read:
71	849.09105  Pyramid promotional schemes prohibited;
72	penalties.--
73	(1)  For purposes of this section:
74	(a)  "Appropriate inventory repurchase program" means a
75	program by which a plan or operation repurchases, upon request
76	and upon commercially reasonable terms, when the salesperson's
77	business relationship with the company ends, current and
78	marketable inventory in the possession of the salesperson that
79	was purchased by the salesperson for resale. Any such plan or
80	operation shall clearly describe the program in its recruiting
81	literature, sales manual, or contract with independent
82	salespersons, including the disclosure of any inventory that is
83	not eligible for repurchase under the program.
84	(b)  "Commercially reasonable terms" means the repurchase
85	of current and marketable inventory within 12 months from the
86	date of purchase at not less than 90 percent of the original net
87	cost, less appropriate set-offs and legal claims, if any.
88	(c)  "Compensation" means a payment of any money, thing of
89	value, or financial benefit conferred in return for inducing
90	another person to participate in a pyramid promotional scheme.
91	(d)  "Consideration" means the payment of cash or the
92	purchase of goods, services, or intangible property. The term
93	does not include the purchase of goods or services furnished at
94	cost to be used in making sales and not for resale or time and
95	effort spent in pursuit of sales or recruiting activities.
96	(e)  "Current and marketable" excludes inventory that is no
97	longer within its commercially reasonable use or shelf-life
98	period; was clearly described to salespersons prior to purchase
99	as seasonal, discontinued, or special promotion products not
100	subject to the plan or operation's inventory repurchase program;
101	or has been used or opened.
102	(f)  "Inventory" includes both goods and services,
103	including company-produced promotional materials, sales aids,
104	and sales kits that the plan or operation requires independent
105	salespersons to purchase.
106	(g)  "Promote" means contrive, prepare, establish, plan,
107	operate, advertise, or otherwise induce or attempt to induce
108	another person to participate in a pyramid promotional scheme,
109	including a pyramid promotional scheme run through the Internet,
110	e-mail, or other electronic communications.
111	(h)  "Pyramid promotional scheme" means any plan or
112	operation by which a person gives consideration for the
113	opportunity to receive compensation that is derived primarily
114	from the introduction of other persons into the plan or
115	operation rather than from the sale and consumption of goods,
116	services, or intangible property by a participant or other
117	persons introduced into the plan or operation. The term includes
118	any plan or operation under which the number of persons who may
119	participate is limited either expressly or by the application of
120	conditions affecting the eligibility of a person to receive
121	compensation under the plan or operation, or any plan or
122	operation under which a person, on giving consideration, obtains
123	any goods, services, or intangible property in addition to the
124	right to receive compensation.
125	(2)  No person may establish, promote, operate, or
126	participate in any pyramid promotional scheme. A limitation as
127	to the number of persons who may participate in or the presence
128	of additional conditions affecting eligibility for the
129	opportunity to receive compensation under a plan does not change
130	the identity of the plan as a pyramid promotional scheme. It is
131	not a defense under this section that a person, on giving
132	consideration, obtains goods, services, or intangible property
133	in addition to the right to receive compensation.
134	(3)  Nothing in this section may be construed to prohibit a
135	plan or operation, or to define a plan or operation as a pyramid
136	promotional scheme, based on the fact that participants in the
137	plan or operation give consideration in return for the right to
138	receive compensation based upon purchases of goods, services, or
139	intangible property by participants for personal use,
140	consumption, or resale so long as the plan or operation does not
141	promote or induce inventory loading and the plan or operation
142	implements an appropriate inventory repurchase program.
143	(4)  The provisions of this section do not preclude,
144	preempt, or prohibit the Attorney General from proceeding
145	against any plan, operation, or scheme or any person involved
146	with such plan, operation, or scheme under any other provision
147	of law.
148	(5)  If it appears to the Attorney General that any person
149	has engaged in any act or practice constituting a violation of
150	any provision of this section, or any order under this section,
151	the Attorney General may:
152	(a)  Issue a cease and desist order, with or without prior
153	hearing, against any person engaged in the prohibited
154	activities, directing such person to cease and desist from
155	further illegal activities;
156	(b)  Bring an action in the circuit court to enjoin the
157	acts or practices to enforce compliance with this section or any
158	order under this section;
159	(c)  Impose by order and collect a civil penalty against
160	any person found in an administrative action to have violated
161	any provision of this section, or any order issued under this
162	section, in an amount not to exceed $10,000 per violation per
163	person. The Attorney General may bring actions to recover
164	penalties pursuant to this paragraph in circuit court. All civil
165	penalties received shall be deposited in the General Revenue
166	Fund; or
167	(d)  Bring an action in the circuit court under the
168	criminal laws of this state.
169	(6)  Any person named in a cease and desist order issued
170	pursuant to this section shall be notified of his or her right
171	to file, within 15 days after the receipt of the order, a
172	written notice for a hearing with the Attorney General. If the
173	Attorney General does not receive a written request for a
174	hearing within the time specified, the cease and desist order
175	shall be permanent and the person named in the order is deemed
176	to have waived all rights to a hearing. Every such order shall
177	state its effective date and shall concisely state its intent or
178	purpose and the grounds on which such order is based. Any person
179	aggrieved by a final order issued pursuant to this section may
180	obtain a review of the order in the circuit court.
181	(7)  Upon a proper showing, a permanent or temporary
182	injunction, restraining order, or writ of mandamus shall be
183	granted and a receiver or conservator may be appointed for the
184	defendant or defendant's assets. In addition, upon a proper
185	showing by the Attorney General, the court may enter an order of
186	rescission, restitution, or disgorgement directed to any person
187	who has engaged in any act constituting a violation of any
188	provision of this section or any order under this section. The
189	court may not require the Attorney General to post a bond. In
190	addition to fines or penalties, the Attorney General shall
191	collect costs and attorney fees.
192	(8)(a)  Any person who establishes, promotes, or operates a
193	pyramid promotional scheme commits a felony of the third degree,
194	punishable as provided in s. 775.082 or s. 775.083.
195	(b)  Any person who participates in a pyramid promotional
196	scheme commits a misdemeanor of the first degree, punishable as
197	provided in s. 775.082 or s. 775.083.
198	Section 3.  This act shall take effect upon becoming a law.

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