|Received:||7/16/2006 4:12:01 AM|
|Subject:||Business Opportunity Rule|
|Title:||Notice of Proposed Rulemaking|
|CFR Citation:||16 CFR Part 437|
Comments:Re: Business Opportunity Rule R511993 Five years ago, I was introduced to multilevel marketing. I am now involved with my fourth multilevel marketing company. My engagement with the first three companies made me understand that not all products are created equal...and not all companies are managed properly. These weaknesses need to be addressed at this time. However, these opportunities were all legitimate and I am grateful that I have continued to pursue companies that incorporated this type of marketing because the legitimacy and longevity of the multilevel marketing plan is undeniable. This is the wave of the very near future! The weaknesses of business opportunities not yet governed by the FTC can be overcome by regulation. For this reason, I fully support the FTC's proposal to apply more strict standards upon companies and business opportunity sellers that require an initial investment under $500. Unfortunately, there are some inherent weaknesses in the FTC’s proposal, so please consider the following points in your decision. 1. Business opportunity sellers requiring an investment under $500 are an entirely different entity than corporations and franchises who have established physical locations. The first is a consumer driven growth model offering the individual a way to achieve their desired level of success through individual product consumption and distribution. The second is a traditional business model relying on image branding, targeted marketing and a paid labor force. Simply eliminating the $500 minimum investment requirement so that the same rules apply to both would severely limit the growth of and put at a disadvantage legitimate business opportunity sellers. 2. If a uniform disclosure is adopted, the following changes should be made to apply to business opportunity sellers with initial investments under $500: a. The seven day waiting period should be eliminated or should not be mandatory because this waiting period suggests a level of risk that does not exist. If included, the prospective purchaser should be allowed to waive this requirement. b. The list of nearest references should be based on the nearness of business association, not geographic nearness. References with geographic nearness are better suited to traditional businesses models. By basing references on the nearness of business association, the prospective purchaser can contact those who are more likely to be in a similar position in the business opportunity, allowing them to better relate and more able to fully disclose the positive and negative aspects of their involvement. c. The disclosure of all legal actions is necessary, but must provide for disclosure of the outcome of the litigation and a written explanation from the business opportunity seller regarding pending judgments. An individual must be given the opportunity to explain his actions. I agree with the proposed rule that would not require any business opportunity seller to make an earnings claim. However, if they did make an earnings claim, they would be required to provide additional substantiation in the form of an “Earnings Claims Statement.” If an earnings claim is made, it should be supported with documentation for all to see. I agree with disclosing the total number of purchasers in the past two years and the number of those purchasers seeking a refund or to cancel in that time period. This disclosure is needed so that the business opportunity seller can be held more accountable for his or her recruiting methods. I agree with disclosing whether the seller has cancellation or refund policies and such policies’ terms. I agree with the proposed rule that would prohibit unfair or deceptive practices that are common among fraudulent business opportunity sellers. These will protect the consumer and will not unnecessarily hinder legitimate business opportunity sellers. I would like to thank the Commission for taking into consideration these comments.