HB 265 — Prohibition of Pyramid Promotional Schemes

F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HBCS/HB 265 2026 A bill to be entitled An act relating to the prohibition of pyramid promotional schemes;

providing a short title;

providing construction;

requiring the Department of Legal Affairs to issue and serve a complaint and cease and desist order in certain instances;

establishing procedures for cease and desist orders;

authorizing the department to apply for an injunction;

providing requirements for an injunction;

authorizing the court to appoint a receiver;

providing for the powers and duties of such receivership;

authorizing the court to issue an order to stay certain actions and requiring such actions be assigned to the judge who appointed the receiver;

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hb265-00 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HB 265 2026 Section 1.

This act may be cited as the "Direct Sales Consumer Protection Act." Section 2.

penalties.— (1) The organization of any chain letter club, pyramid club, or other group organized or brought together under any plan or device whereby fees or dues or anything of material value to be paid or given by members thereof are to be paid or given to any other member thereof, which plan or device includes any provision for the increase in such membership through a chainPage process1 of new6 membersCODING: securing other new members and thereby advancing themselves in the group to a position where such members in turn receive fees, dues, or things of material value from other members, is hereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a member of, or affiliating with, any such group or organization or who shall solicit any person for membership or affiliation in any such group or organization commits a misdemeanor of the first degree, punishable as provided in s.

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hb265-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 265 2026 chain process of new members securing other new members and thereby advancing themselves in the group to a position where such members in turn receive fees, dues, or things of material value from other members, is hereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a member of, or affiliating with, any such group or organization or who shall solicit any person for membership or affiliation in any such group or organization commits a misdemeanor of the first degree, punishable as provided in s.

(2) A "pyramid sales scheme," which is any sales or marketing plan or operation whereby a person pays a Pageconsideration 2of any kind, or makes an investment of 10any CODING:kind, in excess of $100 and acquires the opportunity to receive a benefit or thing of value which is not primarily contingent on the volume or quantity of goods, services, or other property sold in bona fide sales to consumers, and which is related to the inducement of additional persons, by himself or herself or others, regardless of number, to participate in the same sales or marketing plan or operation, is hereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a member of or affiliating with, any such group or organization or who shall solicit any person for membership or affiliation in any such group or organization commits a misdemeanor of the first degree, punishable as provided in s.

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hb265-00hb265-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HBCS/HB 265 2026 consideration775.082 of any kind, or makes an investment of any kind, in excess of $100 and acquires the opportunity to receive a benefit or thing of value which is not primarily contingent on the volume or quantity of goods, services, or other property sold in bona fide sales to consumers, and which is related to the inducement of additional persons, by himself or herself or others, regardless of number, to participate in the same sales or marketing plan or operation, is hereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a member of or affiliating with, any such group or organization or who shall solicit any person for membership or affiliation in any such group or organization commits a misdemeanor of the first degree, punishable as provided in s.

775.082 or s.

Section 3.2.

enforcement;definitions;

remedies;exceptions;

(a) "Compensation" means a payment of any money, thing of value, or financial benefit conferred in return for inducing a Pageperson 3to ofparticipate 10in CODING:a pyramid promotional scheme.

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hb265-00 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HB 265 2026 person to participate in a pyramid promotional scheme.

(c) "Department""Participate" means theto Departmentcontribute ofmoney Legalinto Affairs.a pyramid promotional scheme without promoting, organizing, or operating such scheme.

(d) "Participant""Pyramid promotional scheme" means a personplan whoor takesoperation part in which a pyramidperson promotionalpays scheme.or gives consideration for the right to receive compensation that is primarily based on recruiting other Page 3 of 6 CODING:

(e) "Pyramid promotional scheme" means a plan or operation in which a person pays or gives consideration for the right to receive compensation that is based on recruiting other persons into the plan or operation rather than from the sale and consumption of products, goods, services, or intangible property by a participant or other person introduced into the plan or operation.

The term includes a plan or operation in which the number of persons who may participate is limited either expressly or by the application of conditions affecting the eligibility of a person to receive compensation under the plan or operation, or a plan or operation in which a person, upon giving consideration, obtains any products, goods, services, or intangible property in addition to the right to receive compensation.

(2) A person may not establish, promote, operate, or Page 4 of 10 CODING:

hb265-00hb265-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HBCS/HB 265 2026 participatepersons ininto athe pyramidplan promotionalor scheme,operation evenrather ifthan suchfrom person,the uponsale givingand consideration,consumption obtainsof products, goods, services, or intangible property inby additiona toparticipant theor rightother toperson receiveintroduced compensation.into the plan or operation.

(3)(a)The Thisterm sectionincludes does not prohibit a plan or operation in which participantsthe givenumber considerationof inpersons returnwho formay participate is limited either expressly or by the rightapplication of conditions affecting the eligibility of a person to receive compensation basedunder on the purchaseplan ofor products,operation, goods,or services,a plan or intangibleoperation propertyin bywhich participantsa forperson, personalupon use,giving consumption,consideration, obtains any products, goods, services, or resaleintangible soproperty longin asaddition to the planright orto operation:receive compensation.

(2) A person may not establish, promote, operate, or participate in a pyramid promotional scheme, even if such person, upon giving consideration, obtains products, goods, services, or intangible property in addition to the right to receive compensation.

(3)(a) This section does not prohibit a plan or operation in which participants give consideration in return for the right to receive compensation based on the purchase of products, goods, services, or intangible property by customers or participants for personal use, consumption, or resale so long as the plan or operation:

Does not promote or induce a practice in which athe pyramidplan promotionalor schemeoperation requires its independent salesperson to purchase inventory in an amount exceeding that which the salesperson can expectPage to4 resellof for6 ultimateCODING: consumption or consumption in a reasonable time period, or both;