,,ii  #aae? ,,congress  #b;d ,session   
,s4 #c  ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ 
,,/ates  ,decemb] #c1 #bjah,mr4 ,hat*   
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,comm]ce1 ,sci5ce1 & ,transportation  ,a
 ,,bill  ,to am5d ! ,f$]al ,trade       
,commission ,act to prohibit pyramid    
promotional s*emes to ensure t          
comp5sation is n bas$ ^u recruitm5t (   
p>ticipants into a plan or op]ation1 b  
in/ead bas$ prim>ily on sales to        
individuals :o use1 resell1 or consume !
 products or s]vices sold1 protect      
p>ticipants1 prohibit inv5tory load+1 & 
= o!r purposes4  #a4 ,%ort title ,?is   
,act may be cit$ z ! ,anti-,pyramid     
,promotional ,s*eme ,act ( #bjah4  #b4  
,prohibition on pyramid promotional     
s*emes2 o!r requirem5ts ,! ,f$]al ,trade
 ,commission ,act 7#ae ,u4,s4,c4 #da et 
seq47 is am5d$ by ins]t+ aft] section #e
 ! foll[+3  #e;,a4 7a7 ,x %all be       
unlawful = any p]son to e/abli%1 op]ate1
 promote1 or cause to be promot$ a      

pyramid promotional s*eme4  7b7 ,x %all 
be unlawful = any p]son to e/abli%1     
op]ate1 promote1 or cause to be promot$ 
any plan or op]ation :i* sells or       
solicits ! sale ( consum] products or   
s]vices 9 ! home or o!rwise ?an 9 a     
p]man5t retail e/abli%m5t1 & :i* sells  
products or s]vices directly or         
indirectly to indep5d5t salespeople =   
resale1 to op]ate )\t a bona fide       
inv5tory repur*ase agreem5t4  7c7 ,x    
%all be unlawful = any p]son to e/abli%1
 op]ate1 promote1 or cause to be promot$
 a plan or op]ation :i* causes inv5tory 
load+4  7d7 ,no?+ 9 ?is ,act may be     
con/ru$ to prohibit a plan or op]ation1 
or to def9e a plan or op]ation z a      
pyramid promotional s*eme1 bas$ ^u !    
fact t p>ticipants 9 ! plan or op]ation 
give consid]ation 9 return = ! "r to    
receive comp5sation bas$ ^u pur*ases (  
goods or s]vices or intangible prop]ty  
by p>ticipants = p]sonal use1           
consumption1 or resale s long z ! plan  
or op]ation does n cause inv5tory load+ 

& ! plan or op]ation implem5ts a bona   
fide inv5tory repur*ase agreem5t4  7e7  
,a violation ( subsection 7a71 7b71 or  
7c7 %all be treat$ z a violation "u     
section #e4  4  #c4 ,def9itions ,section
 #d ( ! ,f$]al ,trade ,commission ,act  
7#ae ,u4,s4,c4 #dd7 is am5d$ by add+ at 
! end ! foll[+3  ,bona fide inv5tory    
repur*ase agreem5t means a program by   
:i* a plan or op]ation-- 7#a7           
repur*ases1 on comm]cially reasonable   
t]ms1 curr5t & m>ketable inv5tory       
pur*as$ & ma9ta9$ by a p>ticipant =     
resale1 ^u reque/ at ! t]m9ation ( !    
p>ticipant's bus9ess relation%ip ) !    
plan or op]ation2 &  7#b7 cle>ly        
communicates su* t]ms 9 its recruit+    
lit]ature1 sales manual1 or contracts ) 
p>ticipants1 includ+ ! mann] 9 :i* !    
repur*ase is to be ex]cis$ & disclosure 
( any inv5tory n eligible = repur*ase "u
 ! program4  ,comm]cially reasonable    
means1 ) respect to ! t]ms ( repur*ase  
by a plan or op]ation ( curr5t &        
m>ketable inv5tory f a p>ticipant1 t !  

inv5tory is repur*as$ n lat] ?an #ab    
mon?s aft] ! date ( pur*ase at n less   
?an #ij p]c5t ( ! orig9al net co/ to !  
p>ticipant1 less appropriate set-(fs &  
legal claims1 if any4  ,comp5sation     
means ! paym5t ( any money1 ?+ ( value1 
or f9ancial b5efit4  ,consid]ation--    
7#a7 means ! paym5t ( money or ano!r ?+ 
( value or ! pur*ase ( a product1 good1 
s]vice1 or intangible prop]ty2 &  7#b7  
does n include-- 7,a7 ! pur*ase ( a     
product or s]vice furni%$ at co/ to be  
us$ 9 mak+ a sale & n = resale2 or  7,b7
 any "t & ef=t sp5t 9 pursuit ( sales or
 recruit+ activities4  ,curr5t &        
m>ketable--  7#a7 means1 ) respect to   
inv5tory1 t ! inv5tory-- 7,a7 9 ! case (
 consumable or durable goods1 is unop5$1
 unus$1 & )9 its comm]cially reasonable 
use or %elf-life p]iod2 &  7,b7 9 ! case
 ( s]vices & intangible prop]ty1 includ+
 int]net sites1 repres5ts ! unexpir$    
portion ( any contract or agreem5t2 &   
7#b7 does n include inv5tory t has be5  
cle>ly describ$ by a plan or op]ation to

 a p>ticipant prior to pur*ase z        
disc\nt$1 seasonal1 a special promotion 
item1 or n subject to ! plan or         
op]ation's bona fide inv5tory repur*ase 
agreem5t4  ,inv5tory means bo? goods &  
s]vices1 includ+ company-produc$        
promotional mat]ial1 sales aids1 & sales
 kits t a plan or op]ation requires     
p>ticipants to pur*ase4  ,inv5tory load+
 means a practice 9 :i* a plan or       
op]ation requires or enc\rages its      
p>ticipants to pur*ase inv5tory 9 an    
am\nt exce$+ t :i* ! p>ticipant c       
reasonably expect to use1 consume1 or   
resell to ultimate us]s4  ,p>ticipant   
means a p]son :o jo9s a plan or         
op]ation4  ,pyramid promotional s*eme   
means any plan or op]ation 9 :i*        
individuals pay consid]ation = ! "r to  
receive comp5sation t is prim>ily bas$  
^u recruit+ o!r individuals into ! plan 
or op]ation r ?an relat$ to ! sale (    
products or s]vices to ultimate us]s4   
,ultimate us] means1 ) respect to a     
product or s]vice sold by a plan or     

op]ation1 an individual :o consumes or  
uses ! product or s]vice1 :e!r or n !   
individual is a p>ticipant 9 ! plan or  
op]ation4  4  #d4 ,limitations  7a7 ,o!r
 violations ( ,f$]al law ,no?+ 9 ?is    
,act or ! am5dm5ts made by ?is ,act %all
 be con/ru$ to limit ! au?ority ( any   
,f$]al (ficial f proce$+ aga9/ pyramid  
promotional s*emes 7z def9$ 9 section #d
 ( ! ,f$]al ,trade ,commission ,act 7#ae
 ,u4,s4,c4 #dd77 = o!r violations (     
,f$]al law1 includ+ ! ,f$]al ,trade     
,commission ,act4  7b7 ,/ate law ,no?+ 9
 ?is ,act or ! am5dm5ts made by ?is ,act
 prohibits an au?oriz$ ,/ate (ficial f  
proce$+ 9 a ,/ate c\rt ( compet5t       
jurisdiction on ! basis ( an alleg$     
violation ( any civil or crim9al /atute 
( su* ,/ate4