Anti-Pyramid Promotional Scheme Act of 2017

To amend the Federal Trade Commission Act to prohibit pyramid promotional schemes and to ensure that compensation is not based upon recruitment of participants into a plan or operation, but on sales to individuals who use and consume the products or services sold, and for other purposes. 1. Short title This Act may be cited as the Anti-Pyramid Promotional Scheme Act of 2017 2. Prohibition on pyramid promotional schemes; other requirements The Federal Trade Commission Act ( 15 U.S.C. 41 5A. (a) It shall be unlawful for any person to establish, operate, promote, or cause to be promoted a pyramid promotional scheme. (b) Any person who establishes, operates, promotes, or causes 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 establishment, and which sells products or services directly or indirectly to independent salespeople, shall have a bona fide inventory repurchase agreement. (c) Nothing in this Act may be construed to prohibit a plan or operation, or to define a plan or operation as a pyramid promotional scheme, 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 use, consumption, or resale so long as the plan or operation does not require inventory loading and the plan or operation implements a bona fide inventory repurchase agreement. (d) A violation of subsection (a) or (b) shall be treated as an unfair or deceptive act or practice in or affecting commerce under section 5. . 3. Definitions Section 4 of the Federal Trade Commission Act ( 15 U.S.C. 44 Bona fide inventory repurchase agreement (1) promises to repurchase, on commercially reasonable terms, current and marketable inventory purchased and maintained by a participant for use, consumption, or resale, upon request at the termination of the participant’s business relationship with the plan or operation; and (2) clearly communicates such terms in its recruiting literature, sales manual, or contracts with participants, including the manner in which the repurchase is to be exercised and disclosure of any inventory not eligible for repurchase under the program. Commercially reasonable Compensation Consideration (1) means the payment of money or another thing of value or the purchase of a product, good, service, or intangible property; and (2) does not include— (A) the purchase of a product or service furnished at cost to be used in making a sale and not for resale; or (B) any time and effort spent in pursuit of sales or recruiting activities. Current and marketable (1) means, with respect to inventory, that the inventory— (A) in the case of consumable or durable goods, is unopened, unused, and within its commercially reasonable use or shelf-life period; and (B) in the case of services and intangible property, including internet sites, represents the unexpired portion of any contract or agreement; and (2) does not include inventory that has been clearly described by a plan or operation to a participant prior to purchase as discounted, seasonal, a special promotion item, or not subject to the plan or operation’s inventory repurchase program. Inventory Inventory loading Participant Pyramid promotional scheme Ultimate user . 4. Limitations (a) 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 (as defined in section 4 of the Federal Trade Commission Act ( 15 U.S.C. 44 (b) 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 State.

Summary: Anti-Pyramid Scheme Act of 2017 This bill amends the Federal Trade Commission Act to make it unlawful for any person to establish, operate, or promote a pyramid promotional scheme. "Pyramid promotional scheme" means any plan or operation in which individuals pay consideration for the right to receive compensation that is based upon recruiting other individuals into the plan or operation rather than primarily related to the sale of products or services to ultimate users. Furthermore, any person who establishes, operates, or promotes any plan or operation which sells or solicits the sale of consumer products or services in the home or otherwise outside of a permanent retail establishment, and which sells products or services to independent salespeople, shall have a bona fide inventory repurchase agreement. A violation of the bill shall be treated under the Act as an unfair or deceptive act or practice in, or affecting, commerce.