Tennessee Passes Law to Protect Against Pyramid Schemes

Photo above: The Tennessee Capitol in Nashville.

While critics of direct selling often play fast and loose with the “pyramid scheme” label, clear standards differentiate illegal operations from legitimate businesses. Tennessee lawmakers recently passed a bill, supported by the Direct Selling Association (DSA), that strengthens the state’s existing anti-pyramid laws and protects legitimate direct sellers.

Tennessee’s House Bill 2356 outlines both illegal and legal operations, clarifies existing law and gives law enforcement greater leverage in prosecuting pyramid schemes. The legislation, passed unanimously in the House and by a 32-1 vote in the Senate, uses model language suggested by the Council of State Governments (CSG) and supported by the DSA.

“Pyramid schemes are illegal get-rich-quick ploys,” DSA President Joseph Mariano said in a statement. “The DSA worked closely with supporters in the Tennessee legislature to encourage passage of this bill. We believe it is important to explicitly define illegal pyramid schemes and better differentiate them from legitimate direct selling opportunities.”

Other states have also been proactive in updating their laws governing pyramid schemes. Idaho, Georgia, Utah, Nebraska, Virginia and Washington have all enacted legislation similar to Tennessee’s new law.

Read more on the government, legal and regulatory issues affecting direct sellers at dsa.org.


About Direct Selling News
Direct Selling News Magazine has been serving direct selling and network marketing executives since 2004. Each issue of Direct Selling News offers content on topics that shape the dynamics of our industry.

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