| Comment Number: | 522418-02957 |
| Received: | 6/16/2006 6:28:56 PM |
| Organization: | ForeverGreen International |
| Commenter: | Chris Patterson |
| State: | UT |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| Attachment: | 522418-02957.pdf Download Adobe Reader |
Comments:
ForeverGreen International, LLC June 15, 2006 Federal Trade Commission/Office of the Secretary, Room H-135 (Annex W) Re: Business Opportunity Rule, R511993 600 Pennsylvania Avenue, NW Washington, DC 20580 RE: Business Opportunity Rule, R511993 Dear Sir or Madam: We are writing this letter due to our concern about the proposed New Business Opportunity Rule R511993 (the “Rule”). It is our belief that in its present form, this Rule could severely impact, to our detriment, ForeverGreen International, LLC. (“ForeverGreen”), along with thousands of our independent contractor distributors that rely upon direct selling ForeverGreen products as either their part-time or full-time income. We fully appreciate that the FTC’s responsibilities include protecting the public from “unfair and deceptive acts or practices,” but some of the sections in the Rule will make it very difficult, if not impossible for ForeverGreen to continue as a viable business. Our corporate philosophy includes tenants of “making a difference” through charitable acts of service in our community and wherever our distributors live. ForeverGreen was founded in 2003 and we have been able to take many “community stands” against detrimental business practices in our industry, as well as for many great causes in our communities. Our recent “community stand” against drug abuse has resulted in a company-sponsored documentary that assists us and our children recognize and avoid the dangers of prescription and illegal drug abuse. We believe that we are a force for good in the world and are able to improve our industry and community with our positive actions for good. ForeverGreen has over 50 employees currently and is growing rapidly as we sell whole foods, organic chocolate, marine phytoplankton and organic hair care products to a very receptive distributor and customer base. We have been able to grow from $200,000 a month last year to over $2 million dollars a month in sales this year. We are expanding into international markets at this time and look forward to years of success in benefiting the world with great nutritional products. We have over 10,000 active distributors that depend upon ForeverGreen for our products and their sales commissions. One of the most confusing and burdensome sections of the proposed rule is the seven day waiting period to enroll new distributor/members with ForeverGreen. Our Member Kit that is purchased when a person desires to become a ForeverGreen distributor costs only $39.95. Typical American consumers make many purchases such as cell phones, TVs, cars, and other items that cost much more than that and they do not have to wait seven-days before signing an agreement or contract that may involve paying thousands of dollars over many years time. This waiting period creates the impression that there might be something wrong with the company, the industry or the products. This seven-day waiting period is unnecessary, because ForeverGreen has adopted and regularly provides a 90% buyback policy for all products including sales kits purchased by a salesperson within the last twelve months. Under this waiting period requirement, ForeverGreen will need to keep very detailed records when a ForeverGreen distributor/member first makes contact with a prospective purchaser and will then have to retain these documents for three years. The related administrative costs will be very expensive in both materials and administration. Under the proposed rule, ForeverGreen’s compensation or commission sales plan for its distributor/members would fall under FTC regulatory authority as the existing $500 threshold under the current franchise rule will be eliminated and ForeverGreen will now have to produce numerous pieces of documented materials in order to comply with the proposed Rule. Unfortunately, this burden will only be shared by upstanding direct sales companies, as it is our belief that illegal pyramid schemes and other inappropriate businesses are already in violation of existing FTC rules and regulations and they will not further comply with these additional rules. In short, only good companies are punished by this rule. The proposed rule also calls for the release of any information regarding prior litigation and civil or criminal legal actions involving misrepresentation, or unfair or deceptive practices. It does not matter if the company was found innocent. Today, anyone or any company can be sued for almost anything. While we at ForeverGreen have not been involved in litigation at this time, it is our belief that every business runs a risk of some litigation in the future. However, we at ForeverGreen see little value in disclosing these lawsuits unless ForeverGreen has been found guilty or liable. Otherwise, ForeverGreen is put at an unfair advantage even though we have not done anything wrong. It appears that many bring claims for misrepresentation into nearly every complaint these days. Should prospective distributors be concerned, for example, about litigation between the company and an outside vendor selling packaging if their contract dispute contains a claim for misrepresentation? It seems appropriate to include only litigation that is related to the earning opportunity offered to the prospective distributor. The proposed rule requires direct sellers to gather information for some time periods that include demographic/geographic data and earnings claims. We are concerned that this approach will be ineffective in preventing the targeted business opportunity fraud, since those perpetuating fraudulent business opportunities are already in violation of the law and will not provide accurate data. However, direct sellers such as our company ForeverGreen, which will try to faithfully comply, will have the difficult if not impossible challenge of interpreting and meeting some of the proposed Rule requirements. Finally, the proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. ForeverGreen routinely provides referrals and is happy to provide references, but in these days of identity theft, we are very uncomfortable giving out the personal information of individuals (without their approval) to strangers. Sadly, the requirement to provide references may result in privacy lawsuits, which under the proposed Rule, we would have to report. Also, giving out this information without any controls on how it could be used will very likely and unfairly benefit our competitors. In order to generate the list of the 10 prior purchasers, we will need to obtain the address of the prospective purchaser, search our database for the geographically nearest existing ForeverGreen Member, use a software program or online service such as Mapquest to confirm these are the correct and closest ForeverGreen Members, and then send these results to the prospective Member. The following sentence required by the proposed rule will prevent many people from wanting to sign up as a salesperson “If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers.” People are very concerned about their privacy and identity theft and so is ForeverGreen as we wish to protect personal information and avoid privacy litigation. Individuals will be reluctant to share their personal information with individuals they may have never met. ForeverGreen appreciates the work of the FTC to protect consumers, but we believe this proposed new Rule has many unintended consequences, which may destroy our business and negatively affect the livelihood of thousands of distributor sales people as well as employees. We also believe that there are less burdensome alternatives available in achieving the consumer protection goals stated in the proposed rule. Thank you for your time in considering our comments from ForeverGreen Management and staff. Sincerely, /Chris Patterson/ Chris Patterson General Counsel ForeverGreen International, LLC