PRINTER'S NO. 1952

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1534

Session of

2019

INTRODUCED BY MATZIE, ROAE, HARKINS, SCHLOSSBERG, HILL-EVANS,

BULLOCK, KULIK, MILLARD, McNEILL, CALTAGIRONE, READSHAW,

NEILSON, CIRESI, HOWARD AND KENYATTA, JUNE 3, 2019

District Attorneys certain powers and duties and providing

penalties," further providing for definitions and for

unlawful acts or practices and exclusions.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 2(4)(xiii) of the act of December 17,

1968 (P.L.1224, No.387), known as the Unfair Trade Practices and

Consumer Protection Law, is amended and the section is amended

by adding clauses to read:

Section 2. Definitions.--As used in this act.

further consideration that the purchaser secure or attempt to

secure one or more persons likewise to join the said plan; each

purchaser to be given the right to secure money, goods or

services depending upon the number of persons joining the plan.

In addition, promoting or engaging in any plan, commonly known

as or similar to the so-called ["Chain-Letter Plan" or "Pyramid

Club."] "Chain-Letter Plan," "Pyramid Club" or "Pyramid

Promotional Scheme." The terms "Chain-Letter Plan" or "Pyramid

Club" mean any scheme for the disposal or distribution of

property, services or anything of value whereby a participant

Scheme" means any plan or operation by which a person gives

consideration for the opportunity to receive compensation that

is derived primarily from the introduction of other persons into

the plan or operation rather than from the sale and consumption

of goods, services or intangible property by a participant or

other persons introduced into the plan or operation. 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, and

investment of cash or the purchase of goods, other property,

training or services, but does not include payments made for

sales demonstration equipment and materials for use in making

sales and not for resale furnished at no profit to any person in

the program or to the company or corporation, nor does the term

apply to a minimal initial payment of twenty-five dollars ($25)

or less;

* * *

(5) "Bona fide inventory repurchase program" means a program

by which an entity repurchases from a salesperson current and

the original net cost, less appropriate set-offs and legal

claims, if any.

(7) "Compensation" means a payment of any money, a thing of

value or financial benefit conferred in return for inducing

another person to participate in a Pyramid Promotional Scheme.

(8) "Consideration" means the payment of cash or the

purchase of goods, services or intangible property. The term

shall 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 of sales or recruiting activities. The

company-produced promotional materials, sales aids and sales

kits that an entity requires independent salespersons to

purchase.

(10) "Inventory loading" means the requirement or

encouragement by a plan or operation to have the independent

salesperson of the plan or operation 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 both.

(11) "Person" means an individual, corporation, trust,

(i) is no longer within its commercially reasonable use or

shelf-life period;

(ii) was clearly described to salespersons prior to purchase

as seasonal, discontinued or special promotion products not

subject to the plan or organization's inventory repurpose

program; or

(iii) has been used or open.

Section 2. Section 3 of the act is amended to read:

Section 3. Unlawful Acts or Practices; Exclusions.--(a)

Unfair methods of competition and unfair or deceptive acts or

not apply to any owner, agent or employe of any radio or

television station, or to any owner, publisher, printer, agent

or employe of an Internet service provider or a newspaper or

other publication, periodical or circular, who, in good faith

and without knowledge of the falsity or deceptive character

thereof, publishes, causes to be published or takes part in the

publication of such advertisement.

(b) The provisions of this act may not be construed to

prohibit a plan or operation, or to define a plan or operation

as a Pyramid Promotional Scheme, if the participants in the plan

(1) A person must clearly describe a bona fide inventory

repurchase program in its recruiting literature, sales manual or

contracts with independent salespersons. The recruiting

literature, sales manual or contract must disclose any inventory

that is not eligible for repurchase under the program.

(2) A bona fide inventory repurchase program is not required

to apply to inventory that is no longer within the inventory's

commercially reasonable use or shelf life period or has been

used or opened.

(c) Before a salesperson of the entity purchases any

inventory repurchase program.

Section 3. This act shall take effect immediately.