House unanimously passes Matzie bill to strengthen enforcement efforts against pyramid schemes, protect public from scams

HARRISBURG, June 24 – Combatting fraudulent pyramid schemes that target innocent consumers is the goal of a bill the House passed unanimously today, according to the bill’s author, state Rep. Rob Matzie, D-Beaver/Allegheny.

House Bill 1534 would update and clarify the state’s existing anti-pyramid law by highlighting the difference between legitimate direct selling companies and fraudulent pyramid schemes.

“Pennsylvania’s consumers need the best possible protection from fly-by-night operations that attempt to target innocent members of the public,” Matzie said. “To provide that protection, we need to ensure that outdated language in our anti-pyramid scheme law is brought up to date.

“My bill would update the law and provide the necessary teeth to bolster law enforcement’s prosecution of bad actors. At the same time, it would provide much-needed clarity that would guide legitimate direct-selling companies as to what constitutes acceptable business practices. I’m encouraged that the House unanimously passed my bill, which is a great first step toward protecting the state’s consumers.”

Matzie, the Democratic chairman of the House Consumer Affairs Committee, noted that the new law would encourage companies to adopt two important consumer protections common in the direct-selling industry: an anti-inventory loading provision that would discourage companies from saddling individual direct sellers with more products or services then they can sell or use and a buyback provision that would allow for individuals to sell back at 90% of original cost any unused and currently marketable products purchased within the last 12 months.

Matzie added that many other states have already enacted similar provisions, which are working effectively to combat fraud.

“Twenty-five other states – including Maryland, New Jersey and Ohio – have already enacted stronger anti-fraud laws of this kind. Hopefully, we’re on our way here in the commonwealth to implementing similar protections."

The bill now heads to the Senate for consideration and a vote.