Bill > HB162

This bill amends Delaware's existing law regarding multilevel distribution companies by establishing clear definitions and consumer protections. The bill defines a "multilevel distribution company" as a business that sells goods or services through independent agents at different levels and pays consideration based on sales or recruitment, excluding certain licensed professionals like insurance and real estate agents. The bill requires these companies to provide comprehensive written disclosures to potential participants at least 48 hours before signing a contract, including details about the company, compensation plan, potential earnings, training, and other key information. The disclosure must include stark language warning that the state has not reviewed or endorsed the marketing program. Additionally, the bill mandates that multilevel distribution companies must offer a repurchase option for goods, allowing participants to cancel their contract within three months and receive at least 90% of the original purchase price for resalable goods. Companies that violate these provisions can be subject to significant penalties, including potential treble damages for participants who suffer financial harm. The overall aim of the bill is to increase transparency and protect consumers from potentially predatory multilevel marketing practices by requiring detailed upfront information and providing meaningful exit options.

Business and Industry

https://legis.delaware.gov/BillDetail?LegislationId=142291