| Comment Number: | 522418-12095 |
| Received: | 7/17/2006 6:18:58 PM |
| Organization: | discovermangosteen.com |
| Commenter: | David Nichols |
| State: | MA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Hi, And thank you for the opportunity to comment on the proposed Business Opportunity Rule R511993. First, I would like to say that I applaud the intent of this proposed rule, namely to combat fraud and to prohibit other unfair or deceptive acts. No one who is thinking rightly could endorse, much less, do, such things. Unfortunately, of course, some people do not think rightly in this regard. And for them, there needs to be just laws to penalize such practices. I am writing now, not to challenge the need for regulations to govern the direct sales industry, but to question the fairness of aspects of the proposed Rule R511993. I am new to the Direct Sales Industry (Network Marketing), having opened my own business in March of 2006. Initially, I was slightly suspicious about the people who were helping me to set-up my business. But gradually, I released that my suspicions were misplaced. The people that I have dealt with--and continue to deal with--are of high integrity. I am proud to be associated with them and very grateful for their help--which has been considerable. I realize that there are unscrupulous people in the Direct Sales Industry who take advantage of the unsuspecting. But my experience has been that there are far more professional people in this Industry who conscientiously and generously extend themselves so that beginners like me might succeed. My overall point in this e-mail is this: can we not find regulations for the Direct Sales Industry that apprehend the former without punishing the later? I believe that this is possible. In what follows, I would like to point out some of the burdensome aspects of the proposed regulation that do not seem to strike the right balance between stopping the con artist and regulating the pro. (a) The 7 day waiting period. This requirement prompts me to ask this question: would our nation's retailers tolerate this kind of a restriction on their business activities? Would car dealers, for example, permit such a restriction on car sales? To be sure, the potential for fraud and unscrupulous sales practices are present in the car industry and in all retail selling. But, to date, our government has found ways to regulate these other industries without imposing something as burdensome as a seven day waiting period. Why should Direct Sales be singled out to bear this unfair burden? (b) Nearest References. Again, this requirement is unfairly burdensome. If you want to require references, ask each distributor to keep a bank of such references available and then let the prospective business applicant sift through them. When it comes to references, there will always be ways for con artists to doctor such lists. So why force the honest professional to do more than is really necessary to safeguard the interests of prospective applicants? (c) Earnings claims. This is something that needs oversight because it is so easily subject to abuse and manipulation. But does what R511993 require really address the problem? Can not the con artist simply provide inaccurate data to beguil the innocent? Some other way of regulating this aspect of Direct Sales needs to be suggested than what has been proposed. (d) Elimination of the $500.00 business threshold. Here, the reasoning of R511993 escapes me. The differences between Direct Sales, with their typically low start-up costs, and franchise operations are enormous. Why lump people in Direct Sales with this later class? Often people enter direct sales precisely because this can be done without a lot of money. That is great opportunity. Please don't diminish this opportunity by requiring people in Direct Sales to match the requirements of businesses demanding much greater financial investments to get started. That's all. Again, thank you for helping to make Direct Sales a safer business environment for all. Let's do this in a way that is fair to all. David Nichols