Here is some legal stuff for all the MLM people that want to keep up with the laws proposed that might affect your network marketing business. Scott Johnson send this information. You can hear Scott and peter Mingils on Building Fortunes Radio buildingfortunesradio.com
The bill is summarized here: Missouri House of Representatives – Bill Information for HB1120
The House Committee Substitute for House Bill Nos. 1120 & 1138, introduced in the 103rd General Assembly of Missouri, aims to update laws regarding pyramid sales schemes by repealing and replacing Sections 407.400 and 407.405 of the Revised Statutes of Missouri (RSMo). The legislation, enacted on an unspecified date before April 9, 2025, refines definitions and regulations to address exploitative sales practices while clarifying legal business operations. Section 407.400 defines key terms, including “pyramid sales scheme,” now described as any plan where compensation comes primarily from recruiting others rather than selling goods or services for consumption. New terms like “bona fide inventory repurchase program” outline a system where companies must buy back unsold, marketable inventory from salespeople at 90% of the original cost within 12 months of purchase, protecting against “inventory loading”—forcing excessive stock purchases. Other definitions, such as “commercially reasonable terms,” “consideration,” and “current and marketable,” aim to distinguish legitimate sales from scams, excluding used or outdated inventory from repurchase obligations. Section 407.405 prohibits promoting or selling participation in pyramid schemes, reinforcing penalties for such activities. It mandates 90-day written notice for franchise terminations, except in cases of fraud or insolvency, where notice isn’t required. The law clarifies that plans offering compensation for selling goods or services for personal use or resale aren’t pyramid schemes if they avoid inventory loading and include a repurchase program. Companies must disclose this program and any non-repurchasable inventory (e.g., seasonal or discontinued items) in recruitment materials and contracts. This bill strengthens consumer protections by targeting deceptive multi-level marketing tactics, ensuring salespeople aren’t burdened with unsellable stock, while allowing legitimate direct sales operations to continue. It reflects Missouri’s effort to balance business innovation with safeguards against financial exploitation.
To read the actual bill: documents.house.mo.gov/billtracking/bills251/hlrbillspdf/2577H.02C.pdf
The bill is summarized here: Missouri House of Representatives – Bill Information for HB1120
The House Committee Substitute for House Bill Nos. 1120 & 1138, introduced in the 103rd General Assembly of Missouri, aims to update laws regarding pyramid sales schemes by repealing and replacing Sections 407.400 and 407.405 of the Revised Statutes of Missouri (RSMo). The legislation, enacted on an unspecified date before April 9, 2025, refines definitions and regulations to address exploitative sales practices while clarifying legal business operations. Section 407.400 defines key terms, including “pyramid sales scheme,” now described as any plan where compensation comes primarily from recruiting others rather than selling goods or services for consumption. New terms like “bona fide inventory repurchase program” outline a system where companies must buy back unsold, marketable inventory from salespeople at 90% of the original cost within 12 months of purchase, protecting against “inventory loading”—forcing excessive stock purchases. Other definitions, such as “commercially reasonable terms,” “consideration,” and “current and marketable,” aim to distinguish legitimate sales from scams, excluding used or outdated inventory from repurchase obligations. Section 407.405 prohibits promoting or selling participation in pyramid schemes, reinforcing penalties for such activities. It mandates 90-day written notice for franchise terminations, except in cases of fraud or insolvency, where notice isn’t required. The law clarifies that plans offering compensation for selling goods or services for personal use or resale aren’t pyramid schemes if they avoid inventory loading and include a repurchase program. Companies must disclose this program and any non-repurchasable inventory (e.g., seasonal or discontinued items) in recruitment materials and contracts. This bill strengthens consumer protections by targeting deceptive multi-level marketing tactics, ensuring salespeople aren’t burdened with unsellable stock, while allowing legitimate direct sales operations to continue. It reflects Missouri’s effort to balance business innovation with safeguards against financial exploitation.
To read the actual bill: documents.house.mo.gov/billtracking/bills251/hlrbillspdf/2577H.02C.pdf
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