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Bill Would Ban Multi-Level Marketing For Energy Supply, Require All Suppliers to Assume Civil Liability for Door-to-Door, MLM Sales

February 24, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A bill (HB 520) filed in the Pennsylvania General Assembly would ban multi-level marketing for energy supply, prohibit revenue streams used in other forms of direct selling, and require suppliers to assume civil liability for door-to-door and MLM sales

The bill mirrors HB 66 from the 2013-14 session

The bill would provide that electric and natural gas suppliers, "shall not compensate distributors, employees, contractors, subcontractors, agents or third parties to recruit other distributors, employees, contractors, subcontractors, agents or third parties."

Other forms of network marketing not dependent on level-based compensation would also be constrained.

Suppliers would be prohibited from charging, levying and imposing on subcontractors, third-party marketers, third-party sales agents or similar entities, "a cost, expense or fee for the purpose of engaging in direct or indirect marketing activity on behalf of the [energy] suppliers."

Similarly, suppliers would be prohibited from charging to various marketing agents and entities, "a cost, expense or fee for the purchase of marketing materials, distributorships, binders of sales and training materials and the creation of a marketing Internet website."

Moreover, the bill would require that suppliers engaged in "multilevel marketing and door-to-door marketing" file an annual certificate of liability with the PUC, which shall include, "an acceptance of civil liability for actions of their employees, subcontractors, agents and representatives while engaged in sales and marketing activity." Note that the bill does not define multilevel marketing, and the treatment of warm/network marketing channels not dependent upon level-based compensation is unclear

The bill would also require that suppliers engaged in door-to-door or multi-level marketing activity shall post security of $1,000,000.

The bill would require that suppliers conduct criminal background investigations of, "every employee, contractor, subcontractor, third-party marketer or third-party sales agent engaged in the sale or promotion of their energy supply service, including a check of the Megan's Law registry, prior to the individual's conducting door-to-door marketing or other sales activities."

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