Sec 44-1271. Definitions

In this article, unless the context otherwise requires:

1. "Business opportunity":

(a) Means the sale or lease, or offer for sale or lease, of any goods or services to a consumer for an initial payment of five hundred dollars or greater for the purpose of enabling the consumer to start or operate a business, which sale or lease is not limited to sales initiated or made by the telephone.

(b) Includes a solicitation of consumers in which the seller represents one or more of the following:

(i) That the consumer may or will earn an amount in excess of the initial payment as a result of the purchase.

(ii) That a market exists for any goods to be made or sold or services to be rendered by the consumer.

(iii) That the seller will provide locations or assist the consumer in finding locations for the use or operation of vending machines, racks, display cases or other similar devices or currency-operated amusement machines or devices or any other devices.

(iv) That the seller may purchase from the consumer goods to be made or services to be rendered by the consumer.

(v) That the seller guarantees, either conditionally or unconditionally, that the consumer will derive income from the business opportunity or that the seller will refund all or part of the price paid for the business opportunity or repurchase any of the goods supplied by the seller if the consumer is unsatisfied with the business opportunity.

(vi) That the seller or an entity associated with the seller will provide a sales program or marketing program to the consumer unless the marketing program is offered in conjunction with the licensing of a registered trademark or service mark, if the trademark or service mark has been effectively registered under federal law.

(c) Does not include:

(i) The sale of all or substantially all of the assets of an ongoing business where the owner of that business sells and intends to sell only that one business opportunity.

(ii) The not-for-profit sale of sales demonstration equipment, materials or samples for a total price of five hundred dollars or less.

(iii) The sale of a franchise as defined by the federal trade commission regulations as set forth in 16 Code of Federal Regulations section 436.1.

2. "Consumer" means a person who is solicited by a seller or solicitor.

3. "Goods" means any merchandise, equipment, products, supplies or materials.

4. "Initial payment" means the total amount the purchaser becomes obligated to pay to the seller and to any third party for goods, services or merchandise related to a previously purchased business opportunity, either prior to or at the time of the delivery of any goods, services or merchandise within six months after the commencement of the operation of the business opportunity by the purchaser.

5. "Licensed associated person of a securities, commodities or investments broker" means any associated person registered or licensed by the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

6. "Licensed securities commodities or investments broker, dealer or investment advisor" means a person licensed or registered as a securities commodities or investments broker, dealer or investment advisor by the securities and exchange commission, the national association of securities dealers, a self-regulatory organization as defined in the securities exchange act of 1934 (15 United States Code section 78c) or an official or agency of this state or of any other state of the United States.

7. "Manager" means a person who supervises the work of a solicitor.

8. "Merchandise" means objects, wares, goods, commodities, intangibles, real estate, securities or services.

9. "Person" means:

(a) A natural person or the person's legal representative.

(b) A partnership, a limited liability company, a limited liability partnership or a domestic or foreign corporation.

(c) A company, trust, business entity or association.

(d) An agent, employee, salesman, partner, officer, director, member, stockholder, associate or trustee.

(e) Any other legal entity or any group associated in fact although not a legal entity.

10. "Premium" means any gift, bonus, prize, award or other incentive or inducement to purchase merchandise.

11. "Principal" means an owner or an officer of a corporation or limited liability company, a general partner of a partnership, a sole proprietor of a sole proprietorship, a partner of a limited liability partnership, a trustee of a trust and any other individual who controls, manages or supervises a telephone sales operation.

12. "Prize" means anything offered or purportedly offered and given or purportedly given to a person by chance. Chance exists if a person is guaranteed to receive an item and at the time of the offer or purported offer the seller or solicitor does not identify the specific item that the person will receive.

13. "Prize promotion" means a sweepstakes or other game of chance or an oral or written express or implied representation that a person has won, has been selected to receive or may be eligible to receive a prize or purported prize.

14. "Recovery service" means any business or other practice in which a person represents or implies that the person will recover or assist in recovering for a fee any amount of money that a consumer has provided to a seller pursuant to a telephone solicitation.

15. "Seller" means a person who, directly or through a solicitor, does any of the following:

(a) Initiates telephone calls to provide or arrange to provide merchandise to consumers in exchange for payment.

(b) Solicits by telephone in response to inquiries from a consumer generated by a notification or communication sent or delivered to the consumer that represents or implies that:

(i) The consumer has been specially selected in any manner to receive the notification or communication or the offer contained in the notification or communication.

(ii) The consumer will receive a premium if the consumer calls the person.

(iii) If the consumer purchases merchandise from the person, the consumer will also receive additional or other merchandise, the same as or different from the type of merchandise purchased, without any additional charge or for a price that the person represents or implies is less than the regular price of the merchandise.

(iv) The person is offering for sale the services of a recovery service.

(v) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(vi) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(vii) The person is offering for sale identity protection assistance.

(c) Solicits by telephone in response to inquiries generated by advertisements on behalf of the person that represent or imply that:

(i) The person is offering to sell the services of a recovery service.

(ii) The person is offering to make a loan, to arrange or assist in arranging a loan or to assist in providing information that may lead to obtaining a loan unless no payment of any kind is made until the loan proceeds are disbursed to the borrower.

(iii) The consumer will receive a credit card if the consumer pays a fee for the card before receiving the card.

(d) Solicits consumers to purchase a business opportunity or merchandise related to a business opportunity through any means including the telephone, internet or mail or other hard copy text or through any electronic, wireless or other communication media.

16. "Solicitor" means a person, other than a seller or employee of a seller, who uses a telephone to seek sales or rentals of merchandise on behalf of a seller or uses a telephone to verify sales or rentals for a seller.

17. "Subscriber" means a person who subscribes to residential telephone service from a local exchange company and any person who lives or subscribes with that person.

18. "Telephone solicitation" means any voice communication to a telephone number in this state from a live operator, announcing device or otherwise to offer merchandise for sale or rent.