Comment Number: 522418-00290
Received: 6/1/2006 1:11:08 PM
Organization:
Commenter: M. L. Larue
State: LA
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
No Attachments

Comments:

Dear Sir or Madam: I am writing to express my strong opposition to the proposed Business Opportunity Rule R511993. I understand it is the responsibility of the FTC to protect the public from "unfair and deceptive acts or practices," but the rule as proposed would make it very difficult for me to operate as a Shaklee Independent Distributor. One of the most confusing and burdensome sections of the proposed rule is the 7-day waiting period to enroll new distributors. Most people who sign an application do so to purchase Shaklee products at wholesale. In other words, they are solely consumers of the products. If they later wish to build a business, all they must do is supply Shaklee Corporation with their SSN or Tax ID. There is no additional kit, fee or application required. The Shaklee Member Kit costs only $19.95. This is less than many, if not most, consumer purchases, from TVs to all manner of appliances, none of which require a 7-day waiting period. In addition, the waiting period is unnecessary in that Shaklee Corporation already has a 90% buyback policy for products, including the Member Kit, purchased by a distributor within the last two years. The proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. There are many problems with this proposed requirement. In this day of identity theft, I am uncomfortable giving out personal information of other Shaklee distributors, without their knowledge or consent, to strangers. I understand that those who sign up after the rule takes effect would be told in writing "If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers." I believe this would dissuade new people from signing up as distributors as they are concerned not only about identity theft, but also about their privacy. People today are understandably reluctant to share their personal information with individuals they may never have met. The 10 reference requirement also is an administrative burden. In order to obtain the list of 10 prior purchasers, I will need to provide Shaklee Corporation with the prospective distributor's address, and then wait to receive the list of the 10 nearest distributors who became such within the past 3 years. Each prospective recruit will need a customized disclosure statement. This will result in a delay far longer than 7 calendar days before any potential recruit can sign an application. In view of the fact that many people enter direct selling part-time to earn extra income for a specific goal, such as holiday purchases or family vacation, the long wait may make the goal unattainable. The proposed rule calls for release of information regarding lawsuits that allege misrepresentation, or unfair or deceptive practices over a 10-year period. It does not matter if the company was found innocent or not liable. Today, almost all business lawsuits contain claims of misrepresentation or unfair competition. It does not make sense to me that I would have to disclose these lawsuits unless Shaklee Corporation, or its officers, directors or sales department employees, had been found guilty or liable. Otherwise, 50-year old companies such as Shaklee Corporation and their distributors would be placed at a disadvantage compared to start-up companies, which may not yet have experienced litigation but are far more likely to have legal issues surrounding their opportunities. I have been a Shaklee Distributor for more than 20 years—originally because I love the Company's nutritional/personal care/household products and wanted to earn some additional income. Now I depend upon this income for my livelihood. While I appreciate the work of the FTC to protect consumers, I believe this proposed rule has many unintended consequences for direct sellers. There are less burdensome alternatives available to the agency to achieve its goals. Thank you for your time in considering my comments.