Pyramid Selling Schemes Regulations 1989
| Jurisdiction | UK Non-devolved |
| Citation | SI 1989/2195 |
| Year | 1989 |
1989 No. 2195
FAIR TRADING
The Pyramid Selling Schemes Regulations 1989
Made 24th November 1989
Laid before Parliament 30th November 1989
Coming into Operation 1st March 1990
The Secretary of State in exercise of his powers under section 119 of the Fair Trading Act 19731hereby makes the following Regulations:—
Citation and commencement
1. These Regulations may be cited as the Pyramid Selling Schemes Regulations 1989 and shall come into force on 1st March 1990.
Revocation
2. The Pyramid Selling Schemes Regulations 19732are hereby revoked save that –
(a) regulations 5 and 6 and paragraphs (1), (2) and (3) of Regulation 10 thereof shall continue to apply to things done on or after 1st March 1990 under or in connection with agreements made before that date; and
(b) section 16 of the Interpretation Act 19783shall apply in relation to such revocation.
Interpretation
3. In these Regulations “selling scheme” means a scheme to which Part XI of the Fair Trading Act 1973 applies other than a scheme under which –
(a) the prospect of receiving payments or other benefits in respect of all or any of the matters specified in section 118(2) of that Act is held out to only one participant in the United Kingdom; or
(b) the only prospect held out to any participant of receiving payments or other benefits in respect of matters so specified is the prospect of receiving a sum not exceeding £30 in respect of the introduction by him of another person who becomes a participant.
Contents of advertisements etc
4.—(1) Subject to paragraph (2) of this regulation, a person shall not issue, circulate or distribute any document, being an advertisement, prospectus, circular or notice, containing –
(a)
(a) any invitation to persons to become participants in a selling scheme; or
(b)
(b) any information likely to lead directly or indirectly to persons becoming participants in such a scheme, UNLESS –
(i) it states the date from which the scheme first operated in the United Kingdom or, in the case of a proposed scheme, the date from which it is proposed to operate it;
(ii) it states the name and address of the promoter, or in the case of a scheme promoted by more than one person, the names and addresses of all the promoters;
(iii) it describes the goods or services which form the subject of the scheme;
(iv) it states whether the transactions to be effected under the scheme by any persons who may participate are to be effected in the capacity of a servant or agent of the promoter or promoters or one of the promoters or as a principal; and
(v) it contains a warning which complies with the following:
(aa) it includes the words set out in Part I of the Schedule hereto;
(bb) those words are inserted in an area outlined in the manner indicated in Part I of the Schedule hereto;
(cc) the width of the outlined area is not less than 80 mm, its height is not less than 30 mm and the thickness of the outline is not less than 1 mm;
(dd) the heading “STATUTORY WARNING” is in capital letters not less than 3 mm high;
(ee) the words are easily legible and the lettering of the document is of a colour which is readily distinguishable from the colour of the paper on which it is printed; and
(ff) the words are afforded no less prominence than that given to any other information in the document apart from the heading to the document.
(2) This regulation does not apply to any document –
(a)
(a) which does not indicate the financial benefits which will or may be obtained from participation in a selling scheme; or
(b)
(b) which forms part of a newspaper or magazine; or
(c)
(c) which is handed to a person in a public place.
5.—(1) A promoter of a selling scheme shall not issue, circulate or distribute a document to which regulation 4 applies which contains any statement which indicates or suggests that a participant will as a result of participation derive during any period a specified financial benefit or a financial benefit which will be greater than or not less than a specified sum unless the promoter at the time when he issues, circulates or distributes the document has evidence that the financial benefits indicated or suggested represent the financial benefits or sums actually obtained by one or more of the participants during the same period as a result of participating in the scheme.
(2) Any statement to which paragraph (1) of this regulation refers shall be accompanied by the following statement published with equal prominence and immediately underneath the first mentioned statement:– “The figures shown do not represent any automatic earnings. Actual earnings will depend on time and effort spent on the business and the total number of participants in the scheme.”
Written contracts and rights of participants
6.—(1) Subject to paragraph (2) of this regulation a promoter of, or a participant in, a selling scheme shall not –
(a)
(a) supply goods or services to a participant in the scheme; or
(b)
(b) provide any goods or services under a transaction effected by such a participant; or
(c)
(c) be a party to any arrangement under which goods or services are supplied or provided as aforesaid; or
(d)
(d) accept from any such participant any payment or undertaking to make a payment in respect of any goods or services supplied or provided as mentioned in any of the preceding paragraphs or in respect of any goods or services to be so supplied or provided, UNLESS –
(i) the parties have signed a written agreement which contains all the terms of the agreement under which the relevant participant is participating in the scheme and which complies with regulation 7; and
(ii) a copy of that agreement has been furnished to the participant joining the scheme.
(2) This regulation (and regulations 7 and 8) shall not apply to anything done under or in connection with agreements entered into before 1st March 1990.
Contents of written contracts
7. The written agreement referred to in regulation 6 shall contain:–
(a) the date from which the scheme first operated in the United Kingdom or, in the case of a proposed scheme, the date from which it is proposed to operate it;
(b) the name and address of the promoter or, in the case of a scheme promoted by more than one person, the...
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