HB 162 MLM “house bill” has passed Delaware’s House of Representatives.

Officially the title of
HB 162
is “An act to amend Title 6 of the Delaware Code relating to multilevel distribution companies”.

This Act defines a multilevel distribution company and multilevel marketing program for purposes of this Subchapter.

It sets forth mandatory disclosures that must be made by a multilevel distribution company to any potential purchaser that discloses details about the company, sometimes based on certain representations that the company makes.

It sets forth that a multilevel distribution company may not require a participant in its marketing program to buy a good or service or pay any other consideration to participate in the marketing program unless it agrees to repurchase the goods, under certain conditions.

It permits a civil penalty to be imposed for violations of the required disclosures.

It provides a private right of action for violation of the repurchase requirement, including treble damages, attorneys’ fees and costs to be awarded for a prevailing plaintiff.

The specifics of paragraphs two and three above pertain to disclosures and MLM companies being required to buy back purchased products “under certain conditions”.

With respect to disclosures, HB 162 requires MLM companies to provide new recruits within 48 hours of them signing up:

this statement:
“The State of Delaware has not reviewed and does not approve, recommend, endorse, or sponsor any multilevel marketing program. The information contained in this disclosure has not been checked by the State. If you have any questions about this purchase, see an attorney or other financial adviser before you sign a contract or agreement.”;

the name of the MLM company (including any patent and/or affiliates companies);

a “complete description of the compensation plan”, noting “any inventory purchase requirements”;

a “description of the actual service the seller will undertake to perform for the” recruit (I’m not 100% sure what this means);

the following earnings disclaimer when any income representations are made,
“no guarantee of earnings or range of earnings can be made.”;

when any income representations are made, “the total number of participants who have received” the represented earnings “within the last 3 years.”;

the total number of participants who have signed up with the MLM company over the past 3 years;

a “complete description” of any training provided;

disclosure of any “services” offered in connection with the purchase of products;

disclosure of “the entire and precise nature” of any product buy-back program offered;

disclosure of how many other company promoters there are in the state;

disclosure of how many promoters who have purchased products earn more than they spent signing up and purchasing products (percentage ratio);

“median and typical earnings of every person involved in the program”;

Mandatory product purchases by participants is an immediate red fl

🤖 Quick Answer

What is HB 162 in Delaware?
HB 162 is a legislative bill that passed the Delaware House of Representatives, officially titled "An Act to Amend Title 6 of the Delaware Code Relating to Multilevel Distribution Companies." It establishes legal definitions for multilevel distribution companies and multilevel marketing programs, mandates specific disclosures to potential purchasers, and sets consumer protection requirements including repurchase obligations for unsold goods.

What disclosures does HB 162 require from MLM companies?
HB 162 requires multilevel distribution companies to provide mandatory disclosures to any potential purchaser detailing relevant information about the company. These disclosures are sometimes triggered by specific representations the company makes and are designed to ensure transparency before individuals commit to participating in a multilevel marketing program.

How does HB 162 protect MLM participants in Delaware?
HB

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