|Received:||7/17/2006 10:00:29 PM|
|Subject:||Business Opportunity Rule|
|Title:||Notice of Proposed Rulemaking|
|CFR Citation:||16 CFR Part 437|
Comments:In response to proposed rule R511993 Business Opportunity Rule: We have been IBO’s with the Quixtar business since it’s inception in 1999. Our experience with an MLM business has been eye opening. It is a business that truly epitomizes capitalism, which is both refreshing and challenging. It also brings out the best in people who pursue their success honestly. Having an MLM has given my family a freedom we did not think possible. Based on hard work and a strong work ethic, our business has continued to grow over the years, even when medical situations did not allow us to actively build our business. It has created a retirement structure for us that will allow us to retire from our jobs with our income increasing instead of decreasing. The biggest problems with fraudulent businesses is their ability to disguise and deceive. Eliminating deception and seeing through the disguise of these types of businesses can not truly be accomplished by the proposed rules. They would penalize the legitimate and honest businesses, who would stringently adhere to the rules, and would not deter the fraudulent businesses because they would simply ignore the rules, since they are clearly doing that now. Specifying guidelines that make a business legitimate, then making those clear cut details available to the public that is being recruited, seems a better way to keep the fraud to a minimum. Some additional observations: * Legitimate businesses usually have a money back guarantee, which protects the prospect from rash or poorly informed decisions. If the prospect is dissatisfied for any reason, they can quit and get their money back. Since this covers all possible methods that dishonest recruiters might use, it eliminates the need to develop specific solutions to a (possibly unlimited) number of particular tactics. It also eliminates the problems created by the particular solutions, such as: * The waiting period would forcibly delay the success of a new business owner in recouping their investment. In the case of an MLM, each subsequent prospect of the new business owner would also have to wait, thereby multiplying dramatically the time it takes to build a profitable business. * The 10 references requirement, at best, can not be accomplished without compromising the privacy of the business owners on that list. At worst, business owners not directly connected to your organization would have no motive to give a good reference for you to a prospect, and great motivation to try to steal or woo them to their own group. The reference requirement would therefore subject honest businesses to raiding from competing organizations. * The litigation list requirement ignores the fact that the older or more successful a business is, the bigger a target for litigation without merit they become. Meanwhile, newer and less successful companies are more likely to have legal issues but may have few or no formal litigations filed against them yet. The only litigation information that is truly useful to a prospect is that which involves a guilty verdict (on legal grounds) against the supplying company or individual business owners that the prospect will need to work with. Even that assumes that an effective method exists for the newest business owners to stay current with these litigations as they occur, in order to provide the information to prospects. * If one is in fact recruiting prospects to start an independent business (where income is dependent on many variables), then earnings disclosures and the financial substantiation can only be useful to the prospect in broad terms (i.e. average incomes), or in support of specific claims. More than that can actually be misleading; since in a truly independent business, what any particular individual accomplishes has virtually no bearing on what the prospect can or will accomplish.