Comment Number: 522418-06632
Received: 7/6/2006 10:36:41 PM
Organization:
Commenter: Rick Parmelee
State: OH
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
Attachment: 522418-06632.pdf Download Adobe Reader

Comments:

I am concerned about the proposed Business Opportunity Rule R511993. In its presented form, it will prevent me from continuing my very successful small business. I have been a sole proprietor independent distributor / associate with several good public and private companies that use Network Marketing (word of mouth marketing) for more than eleven years. I started my Network Marketing business because I loved the products and services that were offered, wanted to earn some additional money, work from home, without expensive start- up costs, and enable my wife to stay home to care for our children. Now my family depends on this extra income to supplement our budget. Please don’t destroy my small business we need it! There is no other business model that offers me these opportunities. Some of the sections in the proposed rule would make it hard or almost impossible for me to continue with my small business. 1. Seven day waiting period. People buy TVs, cars, and other items that cost much more than that and they don’t have to wait seven-days. This waiting period will certainly inconvenience and “chill” enthusiastic individuals anxious to participate in with my business opportunity. It will also create an air of suspicion among prospective purchasers when told that the FTC requires such a waiting period. This waiting period will also create tremendous inconvenience for me because I recruit on the road. It will require gathering contact information and following up seven days later, assuming that all the disclosures were given at the time of the meeting. This waiting period suggests a level of risk that simply doesn’t exist for any of the direct selling companies I have been involved with. My company requires a very minimal up-front financial investment, and has a generous buyback policy which presents little or no risk to a prospective purchaser. 2. List of nearest references. I will have to contact my company, which will have to maintain a special database, to access the information required by this disclosure. 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. The disclosure of this information will not be limited to bona fide purchasers, but will have to be given to anyone who might be interested, including competitors. The reference information could then be used for any purpose. The required disclosure of this information will certainly discourage participation in the direct selling industry and will not be a significant deterrent to fraud businesses. It would be very easy for a fraudulent company to provide a list of “references” who are involved in the fraudulent business, but very burdensome on legitimate direct selling businesses. I am glad to provide references, but in this day of identity theft, I am very uncomfortable giving out the personal information of individuals (without their approval) to strangers. Women in my organization may be subject to sexual or racial harassment so this part can’t go in at all, unless the FTC passes an addition to this rule prohibiting sexual or racial attacks related to this disclosure. In the end the rule must bind the FTC to take direct enforcement action on sexual and racial attacks with a special unit assigned to monitor actions related to the disclosure forms. 3. Earnings claim statement.. While my company 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 a