HB 0973

CS

CHAMBER ACTION

1	The Criminal Justice Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to pyramid promotional schemes; amending
7	s. 849.091, F.S.; deleting a provision declaring pyramid
8	sales schemes to be a lottery and providing a criminal
9	penalty for participating in such schemes; creating s.
10	849.09105, F.S.; providing definitions; prohibiting
11	establishing, promoting, operating, or participating in
12	pyramid promotional schemes; providing limitations;
13	providing construction; providing criminal penalties;
14	providing an effective date.
15
16	Be It Enacted by the Legislature of the State of Florida:
17
18	Section 1.  Section 849.091, Florida Statutes, is amended
19	to read:
20	849.091  Chain letters, pyramid clubs, etc., declared a
21	lottery; penalty prohibited; penalties.--
22	(1)  The organization of any chain letter club, pyramid
23	club, or other group organized or brought together under any
24	plan or device whereby fees or dues or anything of material
25	value to be paid or given by members thereof are to be paid or
26	given to any other member thereof, which plan or device includes
27	any provision for the increase in such membership through a
28	chain process of new members securing other new members and
29	thereby advancing themselves in the group to a position where
30	such members in turn receive fees, dues, or things of material
31	value from other members, is hereby declared to be a lottery,
32	and whoever shall participate in any such lottery by becoming a
33	member of, or affiliating with, any such group or organization
34	or who shall solicit any person for membership or affiliation in
35	any such group or organization commits a misdemeanor of the
36	first degree, punishable as provided in s. 775.082 or s.
37	775.083.
38	(2)  A "pyramid sales scheme," which is any sales or
39	marketing plan or operation whereby a person pays a
40	consideration of any kind, or makes an investment of any kind,
41	in excess of $100 and acquires the opportunity to receive a
42	benefit or thing of value which is not primarily contingent on
43	the volume or quantity of goods, services, or other property
44	sold in bona fide sales to consumers, and which is related to
45	the inducement of additional persons, by himself or herself or
46	others, regardless of number, to participate in the same sales
47	or marketing plan or operation, is hereby declared to be a
48	lottery, and whoever shall participate in any such lottery by
49	becoming a member of or affiliating with, any such group or
50	organization or who shall solicit any person for membership or
51	affiliation in any such group or organization commits a
52	misdemeanor of the first degree, punishable as provided in s.
53	775.082 or s. 775.083. For purposes of this subsection, the term
54	"consideration" and the term "investment" do not include the
55	purchase of goods or services furnished at cost for use in
56	making sales, but not for resale, or time and effort spent in
57	the pursuit of sales or recruiting activities.
58	Section 2.  Section 849.09105, Florida Statutes, is created
59	to read:
60	849.09105  Pyramid promotional schemes prohibited;
61	penalties.--
62	(1)  For purposes of this section:
63	(a)  "Appropriate inventory repurchase program" means a
64	program by which a plan or operation repurchases, upon request
65	and upon commercially reasonable terms, when the salesperson's
66	business relationship with the company ends, current and
67	marketable inventory in the possession of the salesperson that
68	was purchased by the salesperson for resale. Any such plan or
69	operation shall clearly describe the program in its recruiting
70	literature, sales manual, or contract with independent
71	salespersons, including the disclosure of any inventory that is
72	not eligible for repurchase under the program.
73	(b)  "Commercially reasonable terms" means the repurchase
74	of current and marketable inventory within 12 months from the
75	date of purchase at not less than 90 percent of the original net
76	cost, less appropriate set-offs and legal claims, if any.
77	(c)  "Compensation" means a payment of any money, thing of
78	value, or financial benefit conferred in return for inducing
79	another person to participate in a pyramid promotional scheme.
80	(d)  "Consideration" means the payment of cash or the
81	purchase of goods, services, or intangible property. The term
82	does not include the purchase of goods or services furnished at
83	cost to be used in making sales and not for resale or time and
84	effort spent in pursuit of sales or recruiting activities.
85	(e)  "Current and marketable" excludes inventory that is no
86	longer within its commercially reasonable use or shelf-life
87	period; was clearly described to salespersons prior to purchase
88	as seasonal, discontinued, or special promotion products not
89	subject to the plan or operation's inventory repurchase program;
90	or has been used or opened.
91	(f)  "Inventory" includes both goods and services,
92	including company-produced promotional materials, sales aids,
93	and sales kits that the plan or operation requires independent
94	salespersons to purchase.
95	(g)  "Promote" means contrive, prepare, establish, plan,
96	operate, advertise, or otherwise induce or attempt to induce
97	another person to participate in a pyramid promotional scheme,
98	including a pyramid promotional scheme run through the Internet,
99	e-mail, or other electronic communications.
100	(h)  "Pyramid promotional scheme" means any plan or
101	operation by which a person gives consideration for the
102	opportunity to receive compensation that is derived primarily
103	from the introduction of other persons into the plan or
104	operation rather than from the sale and consumption of goods,
105	services, or intangible property by a participant or other
106	persons introduced into the plan or operation. The term includes
107	any plan or operation under which the number of persons who may
108	participate is limited either expressly or by the application of
109	conditions affecting the eligibility of a person to receive
110	compensation under the plan or operation, or any plan or
111	operation under which a person, on giving consideration, obtains
112	any goods, services, or intangible property in addition to the
113	right to receive compensation.
114	(2)  No person may establish, promote, operate, or
115	participate in any pyramid promotional scheme. A limitation as
116	to the number of persons who may participate in or the presence
117	of additional conditions affecting eligibility for the
118	opportunity to receive compensation under a plan does not change
119	the identity of the plan as a pyramid promotional scheme. It is
120	not a defense under this section that a person, on giving
121	consideration, obtains goods, services, or intangible property
122	in addition to the right to receive compensation.
123	(3)  Nothing in this section may be construed to prohibit a
124	plan or operation, or to define a plan or operation as a pyramid
125	promotional scheme, based on the fact that participants in the
126	plan or operation give consideration in return for the right to
127	receive compensation based upon purchases of goods, services, or
128	intangible property by participants for personal use,
129	consumption, or resale so long as the plan or operation does not
130	promote or induce inventory loading and the plan or operation
131	implements an appropriate inventory repurchase program.
132	(4)(a)  Any person who establishes, promotes, or operates a
133	pyramid promotional scheme commits a felony of the third degree,
134	punishable as provided in s. 775.082 or s. 775.083.
135	(b)  Any person who knowingly participates in a pyramid
136	promotional scheme commits a misdemeanor of the first degree,
137	punishable as provided in s. 775.082 or s. 775.083.
138	Section 3.  This act shall take effect October 1, 2005.

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