SB 433 — Rewriting code sections regarding pyramid promotional schemes

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Red = new code to be enacted WEST virginia legislature regular session IntroducedCommittee Substitute for Senate Bill 433 By Senators Trump, Gaunch, Palumbo, Prezioso, and Boso [Introduced[Originating Januaryin 31,the 2018;Committee on the Judiciary;

Referredreported toon theFebruary Committee7, on2018] the  Judiciary]  A BILL to amend and reenact §47-15-1 and §47-15-2 of the Code of West Virginia, 1931, as amended, all relating to pyramid promotional schemes;

definitions;defining terms;

andprohibiting unlawfulpyramid acts.promotional schemes;

allowing certain plan or operations which do not cause inventory loading and implement a bona fide inventory repurchase program;

specifying requirements for recruiting literature, sales manuals, and contracts;

providing that a bona fide inventory repurchase program is not required to apply to certain inventory;

and requiring certain disclosures.

(b) “Promote” or “promotion” shall mean the initiation, preparation, operation, advertisement, or the recruitment of any person or persons in the furtherance of any pyramid promotional scheme as defined in subsection (a) of this section (a) “Bona fide inventory repurchase program” means a program by which ana entityperson repurchases from a salesperson current and marketable inventory in the possession of the salesperson, upon request and upon commercially reasonable terms, when the salesperson'ssalesperson’s business relationship with the person is terminated.

(b) “Commercially reasonable terms” means the repurchase of current and marketable inventory within 12 months after the date of purchase at not less than 90 percent of the original net cost, less appropriate set-offs and legal claims, if any.

(d) “Consideration” means the payment of cash or the purchase of goods, services, or intangible property.  The term does not include the purchase of goods or services furnished at cost to be used in making sales and not for resale, or time and effort spent in pursuit orof sales or recruiting activities, (e) “Inventory” includes both goods and services, including companycompany-produced produced promotional materialsmaterials, sales aids, and sales kits that ana entityperson requires independent salespersons to purchase.

(f) “Inventory loading” means the requirement or encouragement by a plan or operation that its independent salesperson purchase inventory in an amount that exceeds the amount that the salesperson can expect to resell for ultimate consumption or to use or consume in a reasonable time period, or bothboth. the requirement or encouragement.

The term includes any plan or operation under which the number of people 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 any plan or operation under which a person, on giving any consideration, obtains any goods, servicesservices, or intangible property in addition to the right to receive compensation.

(a) A person may not establish, promote, or operate any pyramid promotional scheme.  A limitation as to the number of persons who may participate or the presence of additional conditions affecting eligibility for the opportunity to receive compensation under the plan does not change the identity of the plan as a pyramid promotional scheme.

(b) This article may not be construed to prohibit a plan or operation, or to define a plainplan or operation as a pyramid promotional scheme, based on the fact that participants in the plan or operation give consideration in return for the right to receive compensation based upon purchases of goods, services, or intangible property by participants for personal use, consumption, or resaleresale, if both of the following conditions are satisfied:

(c) AnA entityperson mustshall clearly describe a bona fide repurchase program in its recruiting literature, sales manual, or contracts with independent salespersons.

(1) Is no longer within the inventory'sinventory’s commercially reasonable use or shelf life period;

(e) AnA entityperson mustshall clearly describe to a salesperson, prior to purchase, inventory that is excluded from the entity'sentity’s bona fide inventory repurchase program as seasonal, discontinued, or special promotion products not subject to the entity'sentity’s bona fide inventory repurchase program.

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The purpose of this bill is to rewrite sections of the pyramid promotional schemes article.  The bill provides new definitions and more specifically describes what does and does not constitute an unlawful act under article 15.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

Bill Status  |  Bill Tracking  |  Legacy WV Code  |  Bulletin Board  |  District Maps  |  Senate Roster  |  House Roster  |  Live  |  Blog  |  Jobs  |  Links  |  Home This Web site is maintained by the West Virginia Legislature's Office of Reference & Information.