| Comment Number: | 522418-03611 |
| Received: | 6/21/2006 12:19:22 PM |
| Organization: | |
| Commenter: | Ronald Williams |
| State: | CA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Ronald Williams c/o 6/21/06 RE: BUSINESS OPPORTUNITY RULE, R511993 Dear Sir/Madam, I am responding to the proposed New Business Opportunity Rule R511993. This rule will be a significant impediment to the network marketing industry. This new rule represents a significant burden to free market trade. The rule would require a de facto seven day waiting period to enroll new distributors. One would have to sell a person twice on the same business—even if the start-up fee is a mere $19.95. While I support some of the disclosures with modification, I am opposed to a seven-day waiting period because it is excessive burden to any company and distributor who would be required to document and follow-up on the process and an impediment to new business development. The rule requires that any earnings claim statement made by the distributor or company to a prospect, whether written or oral, general or specific, be validated with a detailed “Earnings Claims Statement Required By Law.” Additionally, the distributor would be required to provide written substantiation of any earnings claim made upon request. I support the disclosure of an average earnings income statement because it is good business practices to establish realistic expectations. However, I oppose being forced to provide written substantiation because it is an excessive burden considering the investment of money to enter into the business is nominal. The 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, even if you were found innocent. In our lawsuit-happy culture, anyone can be sued for anything almost with impunity. Regardless of the outcome, you would have to disclose it and explain it to a new business associate which is patently unfair. I would only support the disclosure of previous litigation of companies, executives, affiliated companies and the like involving fraud and misrepresentation only if the party is found guilty. If the defendant is found not guilty, the opposing parties agreed to settle without admission of guilt or the case is still pending, then it should not be necessary to disclose this information. If the parties agreed to settle without admission of guilt, there usually is some public document available, particularly if it involves a government agency and further disclosure therefore would be unnecessary. If a case is pending case, it shouldn’t be commented upon. Lastly, the rule requires the disclosure of a minimum of 10 purchasers closest to you. This is a burden for small businesses and, as a requirement, is a violation of personal confidentiality. It subjects these references to cross-marketing by competitors. I am recommending that contact information for purchasers be available upon request, that their availability be published on company materials, and that due to Internet-marketing, they not be limited to geographic proximity. I understand and value the role of the FTC mission “to stand up for America’s free market process and for its consumers, who benefit from competitive markets in which truthful information flows.” However, I believe this new rule exceeds necessity and needs major modification. A better approach would be to provide consumers with objective criteria when analyzing a business opportunity and let an informed market proceed. I am in support of the disclosures should be made during the sales process without the requirement of a seven-day waiting period, only if modified as suggested. Thank you, in advance, for reviewing and posting my comments. Best regards, Ronald Williams