By SSN Staff
DOVER, Del. — The Delaware House of Representatives passed legislation Tuesday that would impose new disclosure requirements and contract protections for direct selling companies operating in the state.
House Bill 162 passed by a 27-11 vote and now moves to the state Senate for consideration. The bill, sponsored by Rep. Melanie Ross Levin, D-District 10, would require direct selling companies to provide detailed earnings disclosures and allow participants to cancel contracts within the first three months.
Under the legislation, companies would be required to disclose the percentage of participants who earn more than they invest, provide verified earnings statistics and offer buy-back guarantees for at least 90% of unsold inventory when participants cancel.
The Direct Selling Association issued an advocacy alert Tuesday calling the legislation “dangerous and precedent-setting” and urged Delaware-based distributors to contact state senators to oppose the measure.
“This legislation directly impacts their freedom to earn, their right to choose and their ability to build flexible, independent businesses,” the DSA stated in its alert to member companies.
Supporters of the bill cited Federal Trade Commission data indicating that 99% of multi-level marketing participants lose money. Rep. Ross Levin said the legislation targets practices that “often target women in economically vulnerable positions.”
The bill awaits action in the state Senate, where Sen. Stephanie Hansen, D-District 10, is leading the effort.
