Industry mobilization effort helps delay HB 162 until 2026 legislative session
By David Bland
Delaware House Bill 162, legislation that would have imposed unprecedented restrictions on multilevel distribution companies, will not advance to a Senate vote this year after stalling in committee as the legislative session ended June 30.
The bill, which passed the Delaware House by a 27-11 margin on June 17, drew intense opposition from the Direct Selling Association and major companies in the channel that argued the legislation would harm legitimate businesses while failing to address problematic practices.
DSA CEO Dave Grimaldi confirmed June 26 that the bill would not be released from the Senate Banking, Business, Insurance & Technology Committee before adjournment, pushing any further consideration to when the legislature reconvenes in January 2026.
“Thanks to the advocacy efforts of DSA member companies and thousands of independent direct sellers across Delaware, we were able to make progress and collaborate with lawmakers about the possible unintended consequences of the bill’s language,” Grimaldi stated.
Bill Provisions Draw Industry Criticism
As introduced on May 14, HB 162 would have established comprehensive regulations for multilevel distribution companies—including multilevel marketing companies—requiring detailed written disclosures to participants before any financial commitment and mandating specific cancellation policies.
The legislation called for a three-month right of rescission allowing participants to exit programs and receive at least 90% of their initial investment back with no time expiration on the buyback requirement. HB 162’s provisions reflect regulatory trends toward enhanced disclosure requirements and expanded consumer protections that have been introduced in various jurisdictions. The bill’s three-month rescission period differs from typical three-day cooling-off rules, while the unlimited 90% buyback requirement exceeds most companies’ standard 12-month policies.
DSA succeeded in removing some provisions during the legislative process, including a proposed 48-hour waiting period, but argued the remaining requirements would still prove harmful.
Industry advocates identified specific concerns with the bill’s scope and requirements. The legislation contained no threshold to exclude low-cost businesses, unlike other jurisdictions that typically exempt direct selling activities under $500. The required written disclosures were characterized as costly and impractical in a digital environment.
The unlimited 90% buyback mandate removes time limits that most DSA members follow through a standard 12-month policy, creating an uncertain and risky framework, according to channel experts. Additionally, the bill applied to all companies regardless of size, structure or compliance history.
DSA Launches Coordinated Opposition Campaign
The opposition to HB 162 began in earnest June 14 when DSA issued an urgent advocacy alert describing the bill as “an unprecedented threat to the direct selling business model” and calling for immediate action from companies and their sales forces.
The response included coordinated efforts from DSA and member companies, combining traditional lobbying with grassroots mobilization and utilizing both professional advocates and individual distributors.
DSA established dedicated web portals that allowed Delaware-based distributors to contact legislators with a single click, automatically delivering messages to state representatives, senators, bill sponsors, legislative leaders, the governor and attorney general.
House Passes Bill Despite Opposition
The compressed timeline for Delaware House Bill 162 highlighted the challenges facing industry advocates in responding to fast-moving state legislation. The bill’s introduction on May 14 provided industry advocates approximately five weeks to organize opposition before the June 17 House vote.
DSA’s June 14 advocacy alert provided three days for grassroots lobbying ahead of the vote. A little more than an hour after DSA’s advocacy efforts concluded June 17, the Delaware House passed HB 162 by a vote of 27-11.
As DSA stated in a follow-up alert, the association “saw this coming” and had delivered “a forceful, well-articulated argument against this dangerous and precedent-setting legislation.”
Economic Impact Data Surfaces in Senate Battle
Industry advocates cited significant economic data in their opposition efforts during the Senate phase. In a June 26 advocacy piece published as part of DSA’s campaign, SeneGence CEO Joni Rogers-Kante cited the 2025 Direct Selling Education Foundation Growth & Outlook Survey showing Delaware was home to tens of thousands of direct sellers generating millions in economic activity.
In his Senate committee testimony June 25, Grimaldi provided similar figures.
“We are proud of the over 42,000 Delaware residents who participate in direct selling and
those contributions that amount to more than $143 million to the state’s economy,” Grimaldi said.
These economic arguments address legislators’ concerns about business climate and job creation. In smaller states like Delaware, direct selling activity represents measurable economic impact. The data positions the industry as a significant stakeholder in regulatory discussions.
Grimaldi emphasized that direct sellers “are the little engines of the American economy” and noted that “most of them are women.”
Industry Coordination Extends Beyond Delaware
While DSA made direct efforts to include other industry organizations concerned about the legislation’s potential precedent value, some industry advocates were ready to oppose HB 162 as well.
The Utah Direct Selling Coalition identified Delaware HB 162 as a priority early in the year, according to Troy Keller, partner at Dorsey & Whitney LLP and representative for the coalition.
“Earlier this year, the Board of the Utah Direct Selling Coalition decided that Delaware HB 162 was a priority due to how poorly it was designed and the potential for it to spread as an initiative to other states,” Keller told SSN.
Coalition Chair Grant Baskerville of doTERRA monitored the bill’s progress, with various coalition members attending hearings virtually and sending emails and letters throughout the process.
The timing of the pivotal Senate committee hearing created an unusual situation for industry advocates. The hearing was scheduled for the same week the Utah coalition was conducting its annual meetings nearby in Washington, D.C.
“What we could and should do as an industry with respect to this potentially challenging precedent in Delaware became a hot topic of discussion in between our meetings in D.C.,” Keller said.
On Tuesday evening, June 24, Grimaldi and Baskerville made a last-minute decision to drive overnight from Washington to Delaware to testify at the June 25 Senate hearing.
“Dave and Grant’s heroics paid off with the Delaware bill being pushed off from this session,” Keller said.
Grimaldi Testimony Addresses Business Model Concerns
In his Senate committee testimony, Grimaldi highlighted three specific concerns with the amended version. First, he noted the bill “continues to allow compensation tied to recruitment,” which he called “a red flag” since the DSA Code of Ethics only permits payment for product sales.
“The DSA Code of Ethics only pays for product sales, not for adding names to a downline,” Grimaldi told the Senate committee. “If this legislation is truly trying to prevent bad actors, that loophole must be closed.”
Second, Grimaldi argued the required income disclosures could “distort reality,” citing an example where a startup with 10 participants might be required to report that only 10% earned income, creating misleading impressions about early-stage business development.
Third, he contended the one-size-fits-all approach risked “penalizing leaders while hamstringing the best actors” by applying identical requirements to all companies regardless of their compliance history or business practices.
During the Delaware debate, industry representatives addressed the legitimacy of properly structured direct selling operations while acknowledging problems with predatory practices. Industry advocates distinguished between recruitment-based and sales-based compensation structures.
This positioning shows established industry players support targeted regulations while protecting compliant companies. The approach also demonstrates that industry advocates embrace certain regulatory frameworks vs. opposing all oversight.
SeneGence CEO Emerges as Vocal Critic
Rogers-Kante emerged as one of the most vocal industry critics of the bill, publishing a June 26 opinion piece that characterized the legislation as patronizing to women entrepreneurs.
“The bill mandates burdensome disclosures and grants a 3-month right of rescission. These requirements are not just impractical—they’re patronizing,” Rogers-Kante wrote. “They assume that the women who choose this path can’t make informed decisions without government oversight.”
She emphasized women’s empowerment themes, highlighting the demographic as the most represented in direct selling while challenging critics who characterize participants as victims of deceptive schemes.
Rogers-Kante framed HB 162 as “more than a misguided attempt at consumer protection,” arguing it “sends a message that women can’t be trusted with their own decisions.”
The SeneGence CEO urged Delaware lawmakers to “listen to the voices of the women in your communities” rather than “silence them with a law that claims to protect while denying them the right to build businesses on their own terms.”
Industry Points to Existing Oversight
Throughout the debate, DSA emphasized that meaningful oversight already exists through the Direct Selling Self-Regulatory Council (DSSRC), which monitors income and product claims and has reviewed thousands of cases while referring problematic companies to regulators.
“We collaborate with the Federal Trade Commission, we will continue doing so,” Grimaldi told the Senate committee. “We’re not asking to delay reform. We’re asking to get it right for Delaware’s entrepreneurs and its consumers.”
The association maintained its support for “smart, targeted consumer protection” while arguing HB 162 failed to meet that standard.
Technology and Marketing Methods Addressed
HB 162 focused on traditional multilevel-marketing structures, but the legislation’s disclosure requirements would have affected companies operating through modern digital platforms and social media marketing approaches. DSA noted that the bill’s written disclosure mandates were “costly and impractical in a digital environment.”
The challenge of applying traditional regulatory frameworks to digital business models has been recognized in academic and regulatory circles. A 2025 analysis by Financier Worldwide noted that “most of the applicable laws and regulations in these cases were designed and approved pursuant to a classical economic model, without contemplating features that have been introduced by the technology revolution that has occurred in the last few years.”
The analysis found that digital businesses face particular challenges because “most of the markets that have been affected by the appearance of disruptive models are heavily regulated” while existing regulatory frameworks often fail to account for modern technological approaches.
Senate Committee Action Reflects Collaborative Approach
The Senate Banking, Business, Insurance & Technology Committee’s decision to hold the bill occurred after industry lobbying efforts and the June 25 hearing in which Grimaldi testified. The bill had been assigned to the committee on June 17 following the House vote.
Despite the industry’s strong opposition to the legislation, both sides struck notably collaborative tones throughout the Senate process. Primary sponsor Rep. Melanie Ross Levin took a collaborative approach during the legislative process, while Sen. Stephanie Hansen, who served as an additional sponsor, showed willingness to engage with industry representatives throughout the legislative session.
Grimaldi praised Rep. Levin and Sen. Hansen for their “willingness to hear our concerns and work with us on revisions that strengthened the bill’s clarity and protect consumers.”
DSA specifically applauded Levin’s “desire to work with the direct selling channel on pragmatic and common-sense legislation” and emphasized that collaboration with Delaware lawmakers would continue during the interim period.
Broader Implications for Channel
The Delaware legislative battle carries significance beyond state borders, with industry advocates warning that passage could have established a precedent for similar legislation in other jurisdictions.
“What unfolded in Delaware offers a valuable blueprint for the entire channel,” Grimaldi said. “It shows how quickly and unexpectedly legislation impactful to the industry can surface and how important it is to engage early. When DSA and our member companies are brought into the conversation from the start, we can help shape practical, responsible policies that protect consumers and support ethical businesses.”
Grimaldi emphasized DSA’s commitment to continued engagement with policymakers. “We’re eager to continue working with Delaware lawmakers to help meet their consumer protection goals. We also want to ensure we are preserving the dynamic entrepreneurial opportunities that direct selling creates for thousands of individuals across the state.”
The association views the Delaware experience as demonstrating the importance of proactive industry engagement. “We are always working to make connections with our communities and share industry insight with our legislators and policymakers,” Grimaldi added.
Looking Ahead to 2026
The bill’s delay until January 2026 provides both industry representatives and Delaware lawmakers additional time to address the fundamental tensions that emerged during this year’s debate. While DSA achieved its immediate objective of preventing HB 162 from becoming law this session, the underlying regulatory questions remain unresolved.
DSA’s coordinated response included mobilizing member companies and their Delaware sales forces. As Grimaldi noted, “Thanks to the advocacy efforts of DSA member companies and thousands of independent direct sellers across Delaware, we were able to make progress and collaborate with lawmakers about the possible unintended consequences of the bill’s language.”
For Delaware lawmakers, the interim period offers an opportunity to examine more closely the economic data presented by industry advocates while weighing consumer protection concerns that motivated the original legislation. The collaborative relationship that developed between DSA and bill sponsors Rep. Levin and Sen. Hansen suggests potential for compromise that might satisfy both regulatory objectives and industry concerns.
The fundamental challenge remains reconciling legitimate consumer protection goals with business models that provide flexible income opportunities for hundreds of thousands of participants nationwide. Whether Delaware lawmakers and industry representatives can develop that framework during the coming months may determine not only the fate of HB 162 but also the template for addressing these issues in other jurisdictions.
