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Can I offer a freemium version of my product or service in Vermont? What are the requirements?

Offering a Freemium Version of a Product or Service in Vermont

There are no specific laws or regulations in Vermont that prohibit offering a freemium version of a product or service. However, businesses offering such models should ensure that they comply with all applicable laws and regulations, including those related to advertising, consumer protection, and data privacy.

Advertising Requirements

Businesses offering a freemium model should ensure that their advertising materials comply with Vermont’s advertising requirements. Prior to the commencement of any advertising, the issuer must file any advertising materials intended for mass distribution with the Commissioner. The issuer may commence their advertising if the offering is effective and the issuer has not received comments to the advertising materials within five (5) business days of filing with the Commissioner [2.2].

Consumer Protection

Businesses offering a freemium model should ensure that they comply with Vermont’s consumer protection laws. An issuer must deliver an offering document to each offeree at least twenty-four (24) hours prior to any sale of securities under this regulation. The offering document does not have a prescribed format; however, an issuer must fully disclose all material information and not make any factual misstatements or omissions. Further, an issuer must attempt to balance any discussion of the potential rewards of the offering with a discussion of possible risks [2.2].

Data Privacy

Businesses offering a freemium model should ensure that they comply with Vermont’s data privacy laws. Vermont has enacted a data broker regulation that requires data brokers to register with the Vermont Secretary of State and disclose certain information about their data collection practices. The regulation defines a data broker as “a business or unit or units of a business, separately or together, that knowingly collects and sells or licenses to third parties the brokered personal information of a consumer with whom the business does not have a direct relationship” [V.S.A. § 2430].

Small Business Offerings

If you are a small business, you may be exempt from certain requirements if you meet certain criteria. For example, if you are an entity formed under the laws of Vermont and registered with the Vermont Secretary of State, and the offering is only made to residents of Vermont, you may be exempt from certain requirements of 9 V.S.A. §§ 5301 and 5504 [2.1].

Conclusion

There are no specific laws or regulations in Vermont that prohibit offering a freemium version of a product or service. However, businesses offering such models should ensure that they comply with all applicable laws and regulations, including those related to advertising, consumer protection, and data privacy. If you are a small business, you may be exempt from certain requirements if you meet certain criteria.

Source(s):
Jurisdiction

Vermont