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 provides cancellation rights and guidelines. 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. House Substitute No. 1 for House Bill 162 is different from the original in that it reduces some disclosure requirements, specifically the timing, the number of participants who have received the earnings in the amount or range specified within the last 3 years and the total number of participants who have entered into the contract with the seller within the last 3 years; introduces the standard of “clear and conspicuous” for disclosures while removing some specific requirements such as font size to allow for flexibility with a standard; and places the Act in a separate subchapter of Title 6.