| Comment Number: | 522418-05319 |
| Received: | 6/30/2006 4:47:00 PM |
| Organization: | Vemma |
| Commenter: | David Goodman |
| State: | HI |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
To whom it may concern, I would like to state for the record that the FTC busines opertunity rule is a bad idea. I understand that the FTC is trying to protect the consumers however this rule would basicly put me out of business. 1. Seven day waiting period. This waiting period suggests a level of risk that simply doesn’t exist for the Company and many other direct selling companies. Our Company, as most reputable direct selling companies, have a liberal return/cancellation policy. Vemma has no up-front investment cost to join. Anyone that becomes an independent member of our Company may terminate the agreement at any time. Unlike virtually any other business, the independent member not only can terminate upon notice, the Company has a generous buyback policy which presents little or no risk to a prospective purchaser. 2. List of nearest references. This requirement is overly burdensome and evokes confidentiality and privacy concerns for all involved. Logistically speaking, because you don’t know where a prospective purchaser lives before meeting him, it will be difficult to have this information available to disclose until a later time. This will further prolong the seven day waiting period. From a privacy perspective, all distributors will have to agree to have their names, addresses and telephone numbers disclosed to prospective purchasers for possible contacting. 3. Earnings claim statement. While Vemma strongly supports the proposition that earnings claims made by business opportunity sellers should be substantiated, this requirement will not deter fraud. A fraudulent company will not provide accurate data, while legitimate business opportunity sellers will have difficulty in meeting the proposed requirements. 4. Legal actions. The proposed rule requires that members disclose all legal actions, regardless of the outcome, concerning “misrepresentation, fraud, securities law violations, or unfair or deceptive practices” during the previous 10 years. Not only would this rule require disclosure of litigation potentially unrelated to the business opportunity transaction, but it doesn’t provide for disclosure of the outcome of the litigation. Thus, litigation that was favorably resolved for the distributor, or is otherwise irrelevant to the recipient of the disclosures, would still need to be provided. 5. Cancellations and refunds. The FTC's proposed rule is therefore placing the burden on thousands of independent businesses to keep records of, and report to our Company, all oral or written inquiries regarding refunds or cancellations. The Company has always emphasized to all their independent members that requests for refunds and/or cancellation should be liberally granted, absent clear evidence of fraud or misconduct. The proposed FTC rule will punish those companies that encourage such a liberal rule. I strongly disagree with this proposal and do not support its passing into law. Sincerely, David A. Goodman