It is a rainy day in Grand Rapids, today. I took this photo of Lyons Street – showing the Amway Grand Plaza and the Windquest Building.
Speaking of Amway and Windquest, the Michigan House passed a Bill that would benefit Amway’s direct sales business.
The Michigan legislature has been busy proposing some interesting laws that affect business. I posted a few days ago on the recent BCorp legislation.
The Legislature also apparently wants to clarify that direct selling companies like Amway are not within the definition of pyramid schemes.
The Michigan House recently passed four bills that would create a new Act known as the Pyramid Promotional Scheme Act.
Those Bills appear to address the question: what is a pyramid scheme v.s. what is a perfectly legal direct selling business.
Not surprising, the following companies were in support of the Bills:
Direct Selling Association
Amway
American Communications Network
Mary Kay, Inc.
Southwestern Advantage
According to an Article published by U.S. World News
“The new classification more obviously sets distinctions between pyramid schemes and traditional direct selling companies such as Amway, which testified in support of the bill. The legislation exempts operations that repurchase unsold inventory from participants at no less than 90 percent of the original cost.”
the Bills would create a new Act known as the Pyramid Promotional Scheme Act, amend the criminal code, as well as the Michigan Consumer Protection Act.
For more detailed information you can check out the House Fiscal Agency’s Analysis of these 4 bills.
According to the HFA this legislation is intended:
“to more clearly define a pyramid promotion scheme and provide for the attorney general to investigate and prosecute when violations are found”
Stiff Penalties
According to the new Act:
“Any person that promoted a pyramid promotional scheme would be guilty of a felony
punishable by imprisonment for not more than 7 years or a fine of not more than $10,000 (per violation), or both.”
With penalties this severe, it is understandable why certain companies would want to insure they are clearly on the right side of the law.
What’s Next.
Next week the State Senate Commerce Committee will be taking on these four bills.
The Meeting will be held on Wednesday, May 9 at 9:00 am in Lansing.
This could result in a fast track course for this new Act.
Questions? Comments?
Jeshua@dwlawpc.com
Connect with me on Twitter: @JeshuaTLauka
Purpose Driven General Counsel 