HB 0973

A bill to be entitled
2An act relating to pyramid promotional schemes; amending
3s. 849.091, F.S.; deleting a provision declaring pyramid
4sales schemes to be a lottery and providing a criminal
5penalty for participating in such schemes; creating s.
6849.09105, F.S.; providing definitions; prohibiting
7establishing, promoting, operating, or participating in
8pyramid promotional schemes; providing limitations;
9providing construction; preserving the Attorney General's
10authority to bring certain actions; authorizing the
11Attorney General to issue certain orders, bring certain
12actions, and impose certain civil penalties; requiring
13notification of persons named in certain orders to a right
14to a hearing; providing for waiver of such right under
15certain circumstances; providing requirements for such
16orders; providing for granting certain injunctions,
17restraining orders, or writs of mandamus under certain
18circumstances; providing for appointment of a receiver or
19conservator for certain purposes; authorizing a court to
20enter certain additional orders for certain purposes;
21prohibiting a court from requiring the Attorney General to
22post a bond; requiring the Attorney General to collect
23certain costs and attorney fees in addition to fines and
24penalties; providing criminal penalties; providing an
25effective date.
27Be It Enacted by the Legislature of the State of Florida:
29     Section 1.  Section 849.091, Florida Statutes, is amended
30to read:
31     849.091  Chain letters, pyramid clubs, etc., declared a
32lottery; prohibited; penalties.--
33     (1)  The organization of any chain letter club, pyramid
34club, or other group organized or brought together under any
35plan or device whereby fees or dues or anything of material
36value to be paid or given by members thereof are to be paid or
37given to any other member thereof, which plan or device includes
38any provision for the increase in such membership through a
39chain process of new members securing other new members and
40thereby advancing themselves in the group to a position where
41such members in turn receive fees, dues, or things of material
42value from other members, is hereby declared to be a lottery,
43and whoever shall participate in any such lottery by becoming a
44member of, or affiliating with, any such group or organization
45or who shall solicit any person for membership or affiliation in
46any such group or organization commits a misdemeanor of the
47first degree, punishable as provided in s. 775.082 or s.
49     (2)  A "pyramid sales scheme," which is any sales or
50marketing plan or operation whereby a person pays a
51consideration of any kind, or makes an investment of any kind,
52in excess of $100 and acquires the opportunity to receive a
53benefit or thing of value which is not primarily contingent on
54the volume or quantity of goods, services, or other property
55sold in bona fide sales to consumers, and which is related to
56the inducement of additional persons, by himself or herself or
57others, regardless of number, to participate in the same sales
58or marketing plan or operation, is hereby declared to be a
59lottery, and whoever shall participate in any such lottery by
60becoming a member of or affiliating with, any such group or
61organization or who shall solicit any person for membership or
62affiliation in any such group or organization commits a
63misdemeanor of the first degree, punishable as provided in s.
64775.082 or s. 775.083. For purposes of this subsection, the term
65"consideration" and the term "investment" do not include the
66purchase of goods or services furnished at cost for use in
67making sales, but not for resale, or time and effort spent in
68the pursuit of sales or recruiting activities.
69     Section 2.  Section 849.09105, Florida Statutes, is created
70to read:
71     849.09105  Pyramid promotional schemes prohibited;
73     (1)  For purposes of this section:
74     (a)  "Appropriate inventory repurchase program" means a
75program by which a plan or operation repurchases, upon request
76and upon commercially reasonable terms, when the salesperson's
77business relationship with the company ends, current and
78marketable inventory in the possession of the salesperson that
79was purchased by the salesperson for resale. Any such plan or
80operation shall clearly describe the program in its recruiting
81literature, sales manual, or contract with independent
82salespersons, including the disclosure of any inventory that is
83not eligible for repurchase under the program.
84     (b)  "Commercially reasonable terms" means the repurchase
85of current and marketable inventory within 12 months from the
86date of purchase at not less than 90 percent of the original net
87cost, less appropriate set-offs and legal claims, if any.
88     (c)  "Compensation" means a payment of any money, thing of
89value, or financial benefit conferred in return for inducing
90another person to participate in a pyramid promotional scheme.
91     (d)  "Consideration" means the payment of cash or the
92purchase of goods, services, or intangible property. The term
93does not include the purchase of goods or services furnished at
94cost to be used in making sales and not for resale or time and
95effort spent in pursuit of sales or recruiting activities.
96     (e)  "Current and marketable" excludes inventory that is no
97longer within its commercially reasonable use or shelf-life
98period; was clearly described to salespersons prior to purchase
99as seasonal, discontinued, or special promotion products not
100subject to the plan or operation's inventory repurchase program;
101or has been used or opened.
102     (f)  "Inventory" includes both goods and services,
103including company-produced promotional materials, sales aids,
104and sales kits that the plan or operation requires independent
105salespersons to purchase.
106     (g)  "Promote" means contrive, prepare, establish, plan,
107operate, advertise, or otherwise induce or attempt to induce
108another person to participate in a pyramid promotional scheme,
109including a pyramid promotional scheme run through the Internet,
110e-mail, or other electronic communications.
111     (h)  "Pyramid promotional scheme" means any plan or
112operation by which a person gives consideration for the
113opportunity to receive compensation that is derived primarily
114from the introduction of other persons into the plan or
115operation rather than from the sale and consumption of goods,
116services, or intangible property by a participant or other
117persons introduced into the plan or operation. The term includes
118any plan or operation under which the number of persons who may
119participate is limited either expressly or by the application of
120conditions affecting the eligibility of a person to receive
121compensation under the plan or operation, or any plan or
122operation under which a person, on giving consideration, obtains
123any goods, services, or intangible property in addition to the
124right to receive compensation.
125     (2)  No person may establish, promote, operate, or
126participate in any pyramid promotional scheme. A limitation as
127to the number of persons who may participate in or the presence
128of additional conditions affecting eligibility for the
129opportunity to receive compensation under a plan does not change
130the identity of the plan as a pyramid promotional scheme. It is
131not a defense under this section that a person, on giving
132consideration, obtains goods, services, or intangible property
133in addition to the right to receive compensation.
134     (3)  Nothing in this section may be construed to prohibit a
135plan or operation, or to define a plan or operation as a pyramid
136promotional scheme, based on the fact that participants in the
137plan or operation give consideration in return for the right to
138receive compensation based upon purchases of goods, services, or
139intangible property by participants for personal use,
140consumption, or resale so long as the plan or operation does not
141promote or induce inventory loading and the plan or operation
142implements an appropriate inventory repurchase program.
143     (4)  The provisions of this section do not preclude,
144preempt, or prohibit the Attorney General from proceeding
145against any plan, operation, or scheme or any person involved
146with such plan, operation, or scheme under any other provision
147of law.
148     (5)  If it appears to the Attorney General that any person
149has engaged in any act or practice constituting a violation of
150any provision of this section, or any order under this section,
151the Attorney General may:
152     (a)  Issue a cease and desist order, with or without prior
153hearing, against any person engaged in the prohibited
154activities, directing such person to cease and desist from
155further illegal activities;
156     (b)  Bring an action in the circuit court to enjoin the
157acts or practices to enforce compliance with this section or any
158order under this section;
159     (c)  Impose by order and collect a civil penalty against
160any person found in an administrative action to have violated
161any provision of this section, or any order issued under this
162section, in an amount not to exceed $10,000 per violation per
163person. The Attorney General may bring actions to recover
164penalties pursuant to this paragraph in circuit court. All civil
165penalties received shall be deposited in the General Revenue
166Fund; or
167     (d)  Bring an action in the circuit court under the
168criminal laws of this state.
169     (6)  Any person named in a cease and desist order issued
170pursuant to this section shall be notified of his or her right
171to file, within 15 days after the receipt of the order, a
172written notice for a hearing with the Attorney General. If the
173Attorney General does not receive a written request for a
174hearing within the time specified, the cease and desist order
175shall be permanent and the person named in the order is deemed
176to have waived all rights to a hearing. Every such order shall
177state its effective date and shall concisely state its intent or
178purpose and the grounds on which such order is based. Any person
179aggrieved by a final order issued pursuant to this section may
180obtain a review of the order in the circuit court.
181     (7)  Upon a proper showing, a permanent or temporary
182injunction, restraining order, or writ of mandamus shall be
183granted and a receiver or conservator may be appointed for the
184defendant or defendant's assets. In addition, upon a proper
185showing by the Attorney General, the court may enter an order of
186rescission, restitution, or disgorgement directed to any person
187who has engaged in any act constituting a violation of any
188provision of this section or any order under this section. The
189court may not require the Attorney General to post a bond. In
190addition to fines or penalties, the Attorney General shall
191collect costs and attorney fees.
192     (8)(a)  Any person who establishes, promotes, or operates a
193pyramid promotional scheme commits a felony of the third degree,
194punishable as provided in s. 775.082 or s. 775.083.
195     (b)  Any person who participates in a pyramid promotional
196scheme commits a misdemeanor of the first degree, punishable as
197provided 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.