SB 176 Summary

• A person who promotes any pyramid promotional scheme engages in an unlawful practice under Arkansas Code § 4-88-109.

• "Pyramid promotional scheme" is defined as any plan where participants give consideration primarily for compensation from introducing others rather than from sale and consumption of goods or services.

• A plan is not prohibited if it requires consideration for compensation based on participant purchases for personal use or resale, does not require inventory loading, and implements a bona fide inventory repurchase program.

• Entities must repurchase current and marketable inventory from independent salespersons within 12 months of purchase at not less than 90% of original net cost upon termination of the business relationship.

• Entities must clearly disclose in recruiting literature, sales manuals, and contracts which inventory is excluded from repurchase programs, including seasonal, discontinued, or special promotion products.