,,ii #aaeth ,,congress #b;d ,session ,s4 #c ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #c1 #bjah,mr4 ,hatch introduced the following bill2 which was read twice and referred to the ,committee on ,commerce1 ,science1 and ,transportation ,a ,,bill ,to amend the ,federal ,trade ,commission ,act to prohibit pyramid promotional schemes to ensure that compensation is not based upon recruitment of participants into a plan or operation1 but instead based primarily on sales to individuals who use1 resell1 or consume the products or services sold1 protect participants1 prohibit inventory loading1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,anti-,pyramid ,promotional ,scheme ,act of #bjah4 #b4 ,prohibition on pyramid promotional schemes2 other requirements ,the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq47 is amended by inserting after section #e the following3 #e;,a4 7a7 ,it shall be unlawful for any person to establish1 operate1 promote1 or cause to be promoted a pyramid promotional scheme4 7b7 ,it shall be unlawful for any person to establish1 operate1 promote1 or cause to be promoted any plan or operation which sells or solicits the sale of consumer products or services in the home or otherwise than in a permanent retail establishment1 and which sells products or services directly or indirectly to independent salespeople for resale1 to operate without a bona fide inventory repurchase agreement4 7c7 ,it shall be unlawful for any person to establish1 operate1 promote1 or cause to be promoted a plan or operation which causes inventory loading4 7d7 ,nothing in this ,act may be construed to prohibit a plan or operation1 or to define a plan or operation as a pyramid promotional scheme1 based upon the fact that participants in the plan or operation give consideration in return for the right to receive compensation based upon purchases of goods or services or intangible property by participants for personal use1 consumption1 or resale so long as the plan or operation does not cause inventory loading and the plan or operation implements a bona fide inventory repurchase agreement4 7e7 ,a violation of subsection 7a71 7b71 or 7c7 shall be treated as a violation under section #e4 4 #c4 ,definitions ,section #d of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #dd7 is amended by adding at the end the following3 ,bona fide inventory repurchase agreement means a program by which a plan or operation-- 7#a7 repurchases1 on commercially reasonable terms1 current and marketable inventory purchased and maintained by a participant for resale1 upon request at the termination of the participant's business relationship with the plan or operation2 and 7#b7 clearly communicates such terms in its recruiting literature1 sales manual1 or contracts with participants1 including the manner in which the repurchase is to be exercised and disclosure of any inventory not eligible for repurchase under the program4 ,commercially reasonable means1 with respect to the terms of repurchase by a plan or operation of current and marketable inventory from a participant1 that the inventory is repurchased not later than #ab months after the date of purchase at not less than #ij percent of the original net cost to the participant1 less appropriate set-offs and legal claims1 if any4 ,compensation means the payment of any money1 thing of value1 or financial benefit4 ,consideration-- 7#a7 means the payment of money or another thing of value or the purchase of a product1 good1 service1 or intangible property2 and 7#b7 does not include-- 7,a7 the purchase of a product or service furnished at cost to be used in making a sale and not for resale2 or 7,b7 any time and effort spent in pursuit of sales or recruiting activities4 ,current and marketable-- 7#a7 means1 with respect to inventory1 that the inventory-- 7,a7 in the case of consumable or durable goods1 is unopened1 unused1 and within its commercially reasonable use or shelf-life period2 and 7,b7 in the case of services and intangible property1 including internet sites1 represents the unexpired portion of any contract or agreement2 and 7#b7 does not include inventory that has been clearly described by a plan or operation to a participant prior to purchase as discounted1 seasonal1 a special promotion item1 or not subject to the plan or operation's bona fide inventory repurchase agreement4 ,inventory means both goods and services1 including company-produced promotional material1 sales aids1 and sales kits that a plan or operation requires participants to purchase4 ,inventory loading means a practice in which a plan or operation requires or encourages its participants to purchase inventory in an amount exceeding that which the participant can reasonably expect to use1 consume1 or resell to ultimate users4 ,participant means a person who joins a plan or operation4 ,pyramid promotional scheme means any plan or operation in which individuals pay consideration for the right to receive compensation that is primarily based upon recruiting other individuals into the plan or operation rather than related to the sale of products or services to ultimate users4 ,ultimate user means1 with respect to a product or service sold by a plan or operation1 an individual who consumes or uses the product or service1 whether or not the individual is a participant in the plan or operation4 4 #d4 ,limitations 7a7 ,other violations of ,federal law ,nothing in this ,act or the amendments made by this ,act shall be construed to limit the authority of any ,federal official from proceeding against pyramid promotional schemes 7as defined in section #d of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #dd77 for other violations of ,federal law1 including the ,federal ,trade ,commission ,act4 7b7 ,state law ,nothing in this ,act or the amendments made by this ,act prohibits an authorized ,state official from proceeding in a ,state court of competent jurisdiction on the basis of an alleged violation of any civil or criminal statute of such ,state4