HB 0973CS


1The Criminal Justice Committee recommends the following:
3     Council/Committee Substitute
4     Remove the entire bill and insert:
A bill to be entitled
6An act relating to pyramid promotional schemes; amending
7s. 849.091, F.S.; deleting a provision declaring pyramid
8sales schemes to be a lottery and providing a criminal
9penalty for participating in such schemes; creating s.
10849.09105, F.S.; providing definitions; prohibiting
11establishing, promoting, operating, or participating in
12pyramid promotional schemes; providing limitations;
13providing construction; providing criminal penalties;
14providing an effective date.
16Be It Enacted by the Legislature of the State of Florida:
18     Section 1.  Section 849.091, Florida Statutes, is amended
19to read:
20     849.091  Chain letters, pyramid clubs, etc., declared a
21lottery; penalty prohibited; penalties.--
22     (1)  The organization of any chain letter club, pyramid
23club, or other group organized or brought together under any
24plan or device whereby fees or dues or anything of material
25value to be paid or given by members thereof are to be paid or
26given to any other member thereof, which plan or device includes
27any provision for the increase in such membership through a
28chain process of new members securing other new members and
29thereby advancing themselves in the group to a position where
30such members in turn receive fees, dues, or things of material
31value from other members, is hereby declared to be a lottery,
32and whoever shall participate in any such lottery by becoming a
33member of, or affiliating with, any such group or organization
34or who shall solicit any person for membership or affiliation in
35any such group or organization commits a misdemeanor of the
36first degree, punishable as provided in s. 775.082 or s.
38     (2)  A "pyramid sales scheme," which is any sales or
39marketing plan or operation whereby a person pays a
40consideration of any kind, or makes an investment of any kind,
41in excess of $100 and acquires the opportunity to receive a
42benefit or thing of value which is not primarily contingent on
43the volume or quantity of goods, services, or other property
44sold in bona fide sales to consumers, and which is related to
45the inducement of additional persons, by himself or herself or
46others, regardless of number, to participate in the same sales
47or marketing plan or operation, is hereby declared to be a
48lottery, and whoever shall participate in any such lottery by
49becoming a member of or affiliating with, any such group or
50organization or who shall solicit any person for membership or
51affiliation in any such group or organization commits a
52misdemeanor of the first degree, punishable as provided in s.
53775.082 or s. 775.083. For purposes of this subsection, the term
54"consideration" and the term "investment" do not include the
55purchase of goods or services furnished at cost for use in
56making sales, but not for resale, or time and effort spent in
57the pursuit of sales or recruiting activities.
58     Section 2.  Section 849.09105, Florida Statutes, is created
59to read:
60     849.09105  Pyramid promotional schemes prohibited;
62     (1)  For purposes of this section:
63     (a)  "Appropriate inventory repurchase program" means a
64program by which a plan or operation repurchases, upon request
65and upon commercially reasonable terms, when the salesperson's
66business relationship with the company ends, current and
67marketable inventory in the possession of the salesperson that
68was purchased by the salesperson for resale. Any such plan or
69operation shall clearly describe the program in its recruiting
70literature, sales manual, or contract with independent
71salespersons, including the disclosure of any inventory that is
72not eligible for repurchase under the program.
73     (b)  "Commercially reasonable terms" means the repurchase
74of current and marketable inventory within 12 months from the
75date of purchase at not less than 90 percent of the original net
76cost, less appropriate set-offs and legal claims, if any.
77     (c)  "Compensation" means a payment of any money, thing of
78value, or financial benefit conferred in return for inducing
79another person to participate in a pyramid promotional scheme.
80     (d)  "Consideration" means the payment of cash or the
81purchase of goods, services, or intangible property. The term
82does not include the purchase of goods or services furnished at
83cost to be used in making sales and not for resale or time and
84effort spent in pursuit of sales or recruiting activities.
85     (e)  "Current and marketable" excludes inventory that is no
86longer within its commercially reasonable use or shelf-life
87period; was clearly described to salespersons prior to purchase
88as seasonal, discontinued, or special promotion products not
89subject to the plan or operation's inventory repurchase program;
90or has been used or opened.
91     (f)  "Inventory" includes both goods and services,
92including company-produced promotional materials, sales aids,
93and sales kits that the plan or operation requires independent
94salespersons to purchase.
95     (g)  "Promote" means contrive, prepare, establish, plan,
96operate, advertise, or otherwise induce or attempt to induce
97another person to participate in a pyramid promotional scheme,
98including a pyramid promotional scheme run through the Internet,
99e-mail, or other electronic communications.
100     (h)  "Pyramid promotional scheme" means any plan or
101operation by which a person gives consideration for the
102opportunity to receive compensation that is derived primarily
103from the introduction of other persons into the plan or
104operation rather than from the sale and consumption of goods,
105services, or intangible property by a participant or other
106persons introduced into the plan or operation. The term includes
107any plan or operation under which the number of persons who may
108participate is limited either expressly or by the application of
109conditions affecting the eligibility of a person to receive
110compensation under the plan or operation, or any plan or
111operation under which a person, on giving consideration, obtains
112any goods, services, or intangible property in addition to the
113right to receive compensation.
114     (2)  No person may establish, promote, operate, or
115participate in any pyramid promotional scheme. A limitation as
116to the number of persons who may participate in or the presence
117of additional conditions affecting eligibility for the
118opportunity to receive compensation under a plan does not change
119the identity of the plan as a pyramid promotional scheme. It is
120not a defense under this section that a person, on giving
121consideration, obtains goods, services, or intangible property
122in addition to the right to receive compensation.
123     (3)  Nothing in this section may be construed to prohibit a
124plan or operation, or to define a plan or operation as a pyramid
125promotional scheme, based on the fact that participants in the
126plan or operation give consideration in return for the right to
127receive compensation based upon purchases of goods, services, or
128intangible property by participants for personal use,
129consumption, or resale so long as the plan or operation does not
130promote or induce inventory loading and the plan or operation
131implements an appropriate inventory repurchase program.
132     (4)(a)  Any person who establishes, promotes, or operates a
133pyramid promotional scheme commits a felony of the third degree,
134punishable as provided in s. 775.082 or s. 775.083.
135     (b)  Any person who knowingly participates in a pyramid
136promotional scheme commits a misdemeanor of the first degree,
137punishable 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.