HB335 Alabama 2020 Session

Summary

Primary Sponsor

Rhett MarquesRepresentative

Republican

Session

Regular Session 2020

Title

Consumer protection, deceptive trade practices, pyramid sales structure, further provided, Secs. 8-19-3, 8-19-5 am'd.

Summary

HB335 strengthens Alabama's consumer protection by banning pyramid sales structures unless they include a bona fide inventory repurchase program with specific requirements.

What This Bill Does

It tightens the ban on pyramid promotional schemes by allowing only plans that include a bona fide inventory repurchase program. It defines what counts as such a program and the terms that must apply, including repurchasing current and marketable inventory within 12 months at no less than 90% of original net cost. It requires clear disclosures in recruiting materials and contracts about which inventory is eligible for repurchase and which is excluded. It adds these rules to the state's deceptive trade practices law, with the new provisions taking effect after a short delay.

Who It Affects

• Consumers who purchase goods or services, who would be better protected from pyramid schemes and may gain clearer disclosures and potential repurchase options.
• Direct selling companies, plan operators, and independent salespersons, who must implement a bona fide inventory repurchase program and disclose its terms to avoid running an illegal pyramid scheme.

Key Provisions

• Amends Sections 8-19-3 and 8-19-5 to strengthen the prohibition against pyramid sales structures and to allow plans only if they include a bona fide inventory repurchase program.
• Defines key terms: bona fide inventory repurchase program; commercially reasonable terms (repurchase within 12 months at not less than 90% of original net cost); current and marketable inventory; inventory; and pyramid promotional scheme.
• Prohibits selling or offering to sell a right to participate in a pyramid structure, with an exception for plans that include a bona fide inventory repurchase program and do not involve inventory loading; requires disclosures in recruitment materials.
• Outlines requirements for bona fide inventory repurchase programs: clearly described in recruiting literature or contracts; disclosure of which inventory is not eligible for repurchase; description of excluded inventory before repurchase.
• Incorporates related deceptive practices provisions and sets the effective date as the first day of the third month after passage.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Consumers and Consumer Protection