DSA's Pyramid Scheme Bill Trounced in Utah
March 8, 2005
Thanks to the tireless efforts of a handful of people, spearheaded by Dr. Jon Taylor, Utah's HB 269 has been defeated. More. . .
February 22, 2005
HB 269 has been sent to the Senate. Senator Scott Jenkins heads the committee. If you live in Utah, contact Sen. Jenkins immediately about this bill. You can reach him at firstname.lastname@example.org.
February 10, 2005
In a victory for the MLM (multi-level marketing) industry, Utah's House Business and Labor Standing Committee today moved a damaging pyramid scheme bill one step closer to adoption.
The DSA (Direct Selling Association), which has been promoting HR 1220, a federal bill that would essentially legalize all product-based pyramid schemes, assisted Rep. M. Noel to present HB 269 to the committee. Utah has the dubious honor of being home to more MLM companies than any other state.
Proponents say HB 269 will strengthen anti-pyramid scheme laws and help consumers. Dr. Jon M. Taylor calls the bill "fundamentally dishonest."
"It's like saying that someone who commits an armed robbery, gets caught and refunds the money hasn't committed robbery," Taylor claims.
Taylor, who is an advisor to Pyramid Scheme Alert, has spent years conducting research on the MLM industry. He has demonstrated that MLM participation leads to greater financial losses than gambling in Las Vegas (Where's the Harm?), and that over 99% of MLM participants lose money (NuSkin's Naughty Numbers, Survey of Tax Preparers).
"As the only representative for consumers," Taylor said, "I felt like Daniel in the lion's den." Proponents of the bill included Dean Heyl of the DSA, Tim Anderson, general counsel to the MLM Stampin' It Up, Inc., and Stan Lockhart, a spokesman from the Orem and Provo Chamber of Commerce. Lockhart characterized the MLM companies as "some of the best corporate citizens."
HB 269 focuses primarily on the issue of inventory loading, where MLM participants lose money by purchasing excess product. The bill would force companies to buy back excess inventory.
This sounds helpful to consumers. However, the bill also amends certain definitions, thus effectively legalizing pyramid schemes that offer products. As with HR 1220, this bill would place sales to participants for personal consumption on the same footing as sales to end users, allowing an "endless chain" recruitment scheme to become legal.
Such a loophole would have helped to legalize schemes like Equinox International, Trek Alliance, Destiny Telecom, and Heritage International, all of which have been shut down in recent years.