SB164 Alabama 2021 Session

Summary

Primary Sponsor

Tom Whatley

Republican

Session

Regular Session 2021

Title

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

Summary

SB164 strengthens Alabama consumer protection by banning pyramid promotional schemes and adding clear rules for inventory repurchase programs to curb deceptive practices.

What This Bill Does

It expands the deceptive trade practices law to prohibit pyramid promotional schemes and chain referral plans. It creates and defines a bona fide inventory repurchase program with specific terms, including repurchasing inventory within 12 months at not less than 90% of original net cost and requiring clear disclosures about eligible inventory. It also enumerates a broad set of unlawful acts and practices, including misrepresentations about earnings, warranties, or the source of goods, false advertising, and other unfair acts, with motor vehicle damage disclosure and dealer indemnification provisions. The act becomes law on the first day of the third month after it was signed (April 29, 2021).

Who It Affects

• Consumers who buy goods or services in Alabama, who would be protected from pyramid schemes and deceptive marketing practices.
• Businesses that operate or offer pyramid or multi-level marketing plans, seller-assisted plans, or inventory-based programs (including motor vehicle dealers and manufacturers), who must comply with new definitions, disclosures, and prohibitions.

Key Provisions

• Defines and bans pyramid promotional schemes and chain referral sales plans, where compensation mainly comes from recruiting others rather than selling goods or services.
• Creates a bona fide inventory repurchase program with requirements such as repurchasing current and marketable inventory within 12 months at not less than 90% of the original net cost, with allowable deductions and claims.
• Requires clear description of the repurchase program in recruiting literature, manuals, or contracts, including which inventory is not eligible for repurchase.
• Requires upfront disclosure of excluded inventory and seasonal, discontinued, or special-promotion inventory before repurchase actions.
• Specifies that current and marketable inventory excludes items not usable, expired, opened, or those not subject to repurchase under the program.
• Broadly lists unlawful acts and practices, including misrepresentation of earnings, misrepresentation of sponsorship or affiliation, false advertising, failure to ship after payment, and other unconscionable or deceptive activities.
• For motor vehicles, mandates disclosure of material damage known to manufacturers or dealers before delivery and provides for indemnification of dealers by manufacturers for certain pre-delivery damages.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Consumers and Consumer Protection