Daily Court Reporter - News Bill designed to protect public from pyramid schemes
Bill designed to protect public from pyramid schemes
KEITH ARNOLD, Daily Reporter Staff Writer
As state lawmakers make their return to the Ohio Statehouse at the conclusion of the summer recess, members of the Ohio House of Representatives are expected to consider a bill designed to strengthen consumer protection and protect the public from pyramid schemes.
Specifically, House Bill 329 is expected to provide clarity and eliminate confusion in the marketplace, according to the bill's sole sponsor Rep. Dorothy Pelanda, a Marysville Republican.
"House Bill 329 will enhance Ohio's existing laws by drawing a clear line of delineation between direct selling companies and pyramid schemes," Pelanda stated. "The lack of a clear pyramid scheme law in statute may create confusion among the public, particularly when considering that some masquerade as legitimate direct selling companies to defraud consumers.
"Not only will this legislation protect the public from these schemes, but it will guide legitimate direct selling companies as to what constitutes acceptable business practices."
According to the language of the bill, pyramid promotional schemes are any plan or operation by which individuals pay consideration for the chance or opportunity to receive compensation that is derived primarily from recruiting other individuals into the plan or operation rather than from the sale of products or services to ultimate users or from the consumption or use of products or services by ultimate users.
Consideration is defined as the payment of money or anything of value or the purchase of products, services or intangible property, HB 329 stated.
The bill excludes from the meaning of consideration payment for sales demonstration equipment and materials furnished at cost for use in making sales and not for resale; any time or effort spent in pursuit of sale or recruiting activities; and ultimate users - individuals who consume or use a product or service, whether the individual is a participant in the plan or operation.
The measure is meant to clarify enforcement while enacting a law that will protect legitimate Ohio sellers.
Additionally, the bill would differentiate the legal income earning opportunities offered by legitimate direct selling companies from the frauds perpetrated by promoters of pyramid schemes, the lawmaker said.
Pelanda noted that the Council of State Governments adopted similar language into its 2004 Volume of Suggested State Legislation, based on a 2003 South Dakota law.
Since its inclusion, she said, 11 other states including Indiana, Tennessee and Virginia have moved to update their laws.
Finally, HB 329 would establish that businesses in which participants purchase reasonable amounts of product for their own use and there exists no evidence of a pyramid scheme are legitimate businesses.
"I look forward to working with all interested parties on this legislation as it begins the committee process this fall," Pelanda added.
The bill awaits committee referral.
Date Published: September 21, 2017