text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Anti-Pyramid Promotional Scheme Act 
  of 2016''.
  
  SEC. 2. PROHIBITION ON PYRAMID PROMOTIONAL SCHEMES.
  
      (a) In General.--It shall be unlawful for any person to establish, 
  operate, promote or cause to be promoted a pyramid promotional scheme.
      (b) Enforcement by the Federal Trade Commission.--A violation of 
  subsection (a) shall be treated as an unfair or deceptive act or 
  practice in or affecting commerce under section 5 of the Federal Trade 
  Commission Act (15 U.S.C. 45). The Federal Trade Commission shall 
  enforce such subsection in the same manner, by the same means, and with 
  the same jurisdiction, powers, and duties as though all applicable 
  terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 
  et seq.) were incorporated into and made a part of this Act.
  
  SEC. 3. DEFINITIONS.
  
      As used in this Act:
              (1) Appropriate inventory repurchase agreement.--The term 
          ``appropriate inventory purchase agreement'' means a program by 
          which a plan or operation repurchases, upon request at the 
          termination of a participant's business relationship with the 
          plan or operation and based upon commercially reasonable terms, 
          current and marketable inventory purchased and maintained by 
          the participant for resale, use, or consumption, and such plan 
          or operation in its recruiting literature, sales manual, and 
          contracts with participants, including the manner in which the 
          repurchase is exercised, and disclosure of any inventory that 
          is not eligible for repurchase under the program.
              (2) Commercially reasonable terms.--The term ``commercially 
          reasonable terms'' means the repurchase of current and 
          marketable inventory within 12 months from the date of purchase 
          at not less than 90 percent of the original net cost to the 
          participant, less appropriate set-offs and legal claims, if 
          any.
              (3) Compensation.--The term ``compensation'' means the 
          payment of any money, thing of value, financial benefits, or 
          position within the plan or operation;
              (4) Consideration.--The term ``consideration''--
                      (A) means the payment of money or another thing of 
                  value or the purchase of a product, good, service, 
                  intangible property; and
                      (B) does not include--
                              (i) the purchase of a product furnished at 
                          cost to be used in making a sale and not for 
                          resale; or
                              (ii) any time and effort spent in pursuit 
                          of sales or recruiting activities.
              (5) Current and marketable.--The term ``current and 
          marketable'', with respect to inventory--
                      (A) means inventory that--
                              (i) in the case of consumable or durable 
                          goods, is unopened, unused, and within its 
                          commercially reasonable use or shelf-life 
                          period; and
                              (ii) in the case services and intangible 
                          property, including Internet sites, represents 
                          the unexpired portion of any contract or 
                          agreement; and
                      (B) does not include inventory that has been 
                  clearly described to the participant prior to purchase 
                  as discounted, seasonal, special promotion item, or not 
                  subject to the plan or operation's inventory repurchase 
                  program.
              (6) Inventory.--The term ``inventory'' means both goods and 
          services, including company produced promotional material, 
          sales aids, and sales kits that the plan or operation requires 
          participants to purchase.
              (7) Inventory loading.--The term ``inventory loading'' 
          means that the plan or operation requires or encourages its 
          participants to purchase inventory in an amount that 
          unreasonably exceeds that which the participant can expect to 
          resell to ultimate users, or to use or consume, in a reasonable 
          period of time.
              (8) Participant.--The term ``participant'' means a person 
          who joins the plan or operation.
              (9) Pyramid promotional scheme.--The term ``pyramid 
          promotional scheme'' means a plan or operation by which a 
          person gives consideration to a participant for the right to 
          receive compensation that is derived primarily from a 
          participant's introduction of another person into the plan or 
          operation rather than from the sale of products to ultimate 
          users.
              (10) Ultimate user.--The term ``ultimate user'' means a 
          non-participant in the plan or operation, or a participant who 
          purchases reasonable amounts of products, goods, services, or 
          intangible property for personal use and whose purchase is not 
          made solely for purposes of qualifying for increased 
          compensation.
  
  SEC. 4. LIMITATIONS.
  
      Nothing in this Act shall be construed to--
              (1) limit the authority of any Federal official from 
          proceeding against pyramid promotional schemes for other 
          violations of Federal law, including the Federal Trade 
          Commission Act;
              (2) allow for a defense to an enforcement action under 
          section 2 of this Act that the alleged pyramid promotional 
          scheme involved both a franchise to sell a product and the 
          authority to sell additional franchises if the emphasis of the 
          alleged pyramid promotional scheme is on the sale of additional 
          franchises; or
              (3) allow for a defense to an enforcement action under 
          section 2 of this Act that the alleged pyramid promotional 
          scheme included repurchase agreement inventory loading programs 
          if the emphasis of the alleged pyramid promotional scheme is on 
          the sale of additional franchises.
target: Anti-Pyramid Promotional Scheme Act of 2016  This bill prohibits the establishment, operation, or promotion of a pyramid promotional scheme, which is defined as a plan or operation by which a person gives consideration (money or other thing of value) to a participant in the scheme for the right to receive compensation derived primarily from the participant's introduction of another person into the plan or operation rather than from the sale of products to ultimate users. The bill grants enforcement authority to the Federal Trade Commission and requires violations to be treated as unfair or deceptive acts or practices under the Federal Trade Commission Act.
feat_title: Anti-Pyramid Promotional Scheme Act of 2016