Wisconsin Administrative Code
Department of Agriculture, Trade and Consumer Protection
ATCP 90-139 - Trade and Consumer Protection
Chapter ATCP 122 - Chain distributor schemes
Section ATCP 122.01 - Unfair trade practice

The promotional use of a chain distributor scheme in connection with the solicitation of business investments from members of the public is an unfair trade practice under s. 100.20, Stats. When so used the scheme serves as a lure to improvident and uneconomical investment. Many small investors lack commercial expertise and anticipate unrealistic profits through use of the chance to further perpetuate a chain of distributors, without regard to actual market conditions affecting further distribution and sale of the property purchased by them or its market acceptance by final users or consumers. Substantial economic losses to participating distributors have occurred and will inevitably occur by reason of their reliance on perpetuation of the chain distributor scheme as a source of profit.

The rules in chapter ATCP 122 are valid regulations and do not violate freedom of speech or violate the vagueness and overbreadth doctrine. HM Distributors of Milwaukee v. Dept. of Agriculture, 55 W (2d) 261.