§47-15-1. Definitions.

(a) “Bona fide inventory repurchase program” means a program by which a person repurchases from a salesperson current and marketable inventory in the possession of the salesperson, upon request and upon commercially reasonable terms.

(b) “Commercially reasonable terms” means the repurchase of current and marketable inventory at not less than 90 percent of the original net cost.

(c) “Inventory” includes both goods and services, including company-produced promotional materials, sales aids, and sales kits that a person requires independent salespersons to purchase.

(d) “Inventory loading” means the requirement or encouragement by a plan or operation that its independent salesperson purchase inventory in an amount that exceeds the amount that the salesperson could reasonably expect to resell for ultimate consumption, to use or consume in a reasonable time period, or both.

(e) “Promote” or “promotion” shall mean the initiation, preparation, operation, or advertisement, or the recruitment of any person or persons in the furtherance of any pyramid promotional scheme as defined in subsection (f) of this section.

(f) “Pyramid promotional scheme” shall mean the organization of any chain letter club, pyramid club, or other group organized or brought together under any plan or device whereby fees or dues or anything of material value to be paid or given by members thereof are to be paid or given to any other member thereof, which plan or device includes any provision for the increase in such membership through a chain process of any members securing other new members and thereby advancing themselves in the group to a position where such members in turn receive fees, dues, or things of material value from other members.

(b) “Promote” or “promotion” shall mean the initiation, preparation, operation, advertisement, or the recruitment of any person or persons in the furtherance of any pyramid promotional scheme as defined in subsection (a) of this section

§47-15-2. Unlawful act.

(a) No person shall promote any pyramid promotional scheme or inventory loading, either personally or through an agent or agents.

(b) This article may not be construed to define a plan or operation as inventory loading, if the plan or operation implements a bona fide inventory repurchase program, and the bona fide inventory repurchase program is clearly described in the plan or operation’s recruiting literature, sales manual, or is otherwise explained in a written contract provided by independent salespersons.

(1) Is no longer within the inventory’s commercially reasonable use or shelf-life period; or

(2) Has been used or opened.