Every state has adopted laws regulating MLM companies. Visit this page to look up MLM law in your state.read more »
§ 6-29-1 Home solicitation referral selling regulated. – No seller in a home solicitation sale or a cash sale as defined in §6-28-2 shall offer to pay a commission or give a rebate or discount to the buyer in consideration of the buyer's giving to the seller the names of prospective purchasers or otherwise aiding the seller in making a sale to another person, unless the seller actually delivers to the purchaser a chart showing the actual experience of purchasers for the three (3) calendar years ending prior to the contract under consideration, including the number of and monies paid to those who participated in the plan, and unless there shall be a separate, written agreement signed and dated by the buyer and also signed by the seller containing the following in ten-point bold face type or larger, directly above the space reserved in the agreement for the signature of the buyer:
1. No purchase of goods or services between the parties hereto has been induced by the promise of monies to be earned under this agreement.
2. The purchase price of any goods or services in any transaction between the parties hereto has not been increased in any way because of this agreement.
3. No payments due under this agreement may be held up, credited, or set-off toward payment of any obligation between the parties except on written authorization specifically allowing such action.
4. No other representations or agreements, oral or written, have been made by the parties hereto relating to the terms of this agreement.
§ 6-29-2 Sales induced by referral offer voidable. – Any sale made in respect to which a commission, rebate, or discount is represented as being given in return for names of other prospective buyers shall be voidable at the option of the buyer, unless there is a written agreement between the parties to the sale containing the provisions set forth in § 6-29-1.
Other Pages of Interest
MLM law in 50 states, IRS Publication 911, the MLM Textbook, as well as a comprehensive index of articles on the direct selling industry.read more »
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