FTC Explores Changes, Possible Expansion of Its Business Opportunity Rule

The Federal Trade Commission is exploring changes to the Business Opportunity Rule, seeking comment from the public on the rule’s effectiveness and a potential expansion to the rule to cover other types of money-making opportunities, such as coaching or mentoring programs, e-commerce opportunities, or investment opportunities.

“The Commission is prepared to use every tool to ensure that companies can’t prey on consumers with false money-making opportunities,” said Samuel Levine, Director of the Bureau of Consumer Protection. “One key tool is our Business Opportunity Rule, and we want to hear from the public on how we can improve it.”

The FTC is inviting the public to comment not only on the potential expansion of the rule, but also on the effectiveness of the existing rule, including whether it should be retained or eliminated, as well as other changes that should be made to the rule.

The FTC’s Business Opportunity Rule was first adopted in 2012, making it easier for people to get the information they need when they are thinking about investing in a business opportunity.

The Business Opportunity Rule prohibits those selling a business opportunity from making deceptive statements, and it requires them to make a number of key disclosures to potential buyers, including:

• The seller’s identifying information.
• Whether the seller is making claims about possible earnings or profits, and if so, information that backs up those claims.
• Whether the seller, its affiliates, or key personnel have been involved in certain legal actions, and if so, information on those actions.
• Whether the seller has a cancellation or refund policy, and if so, the terms of that policy.
• A list of people who have purchased the business opportunity in the last three years.

For sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

In a Federal Register notice, the FTC is seeking comment from the public on a number of questions related to the rule, including the need for the rule, its benefits and costs to consumers and to industry, the level of compliance with the rule, and any changes that should be made to the rule, including any practices or types of business opportunities that should be covered by the rule. The notice also seeks comment on whether the rule be expanded to more broadly to include coaching or mentoring programs, e-commerce opportunities, investment opportunities, or other types of business or money-making opportunities.

In addition, the notice asks the public to comment on whether business opportunity practices disproportionately affect low-income communities, communities or color, and other historically underserved communities, and suggested amendments to the rule to address any negative effects.

Comments submitted in response to the Commission’s Advance Notice of Proposed Rulemaking concerning deceptive or unfair earnings claims will also be considered as part of this rule review process; there is no need to submit the comments again.

The FTC will be accepting comment on these questions for 60 days after the Rule review notice is published in the Federal Register. Instructions on how to file comments can be found in the Federal Register notice. Once processed, the comments will be posted to Regulations.gov.

The Commission voted 4-0 to publish the Rule review notice in the Federal Register. Chair Lina M. Khan issued a statement.