Submission Number: 00003
Received: 11/11/2010 9:01:40 PM
Agency: Federal Trade Commission
Initiative: Trade Regulation Rule on Disclosure Requirements and Prohibitions Concerning Business Opportunities - FTC File No. R511993
Attachments: No Attachments
The FTC erred by completely ignoring MLM businesses and only using Section 5 of the FTC Act. For example, guidance given by the FTC intended for questions for individual prospects to ask (http://business.ftc.gov/documents/inv08-bottom-line-about-multi-level-marketing-plans) could easily be used as mandatory questions and answers for each MLM, or major groups within each MLM. Here are the questions from the above link:
Here are some important questions to ask your sponsor and distributors at different levels of the organization. Their responses can help you detect false claims about the amount of money you may make and whether the business is a pyramid scheme.
What are your annual sales of the product? How much product did you sell to distributors? What percentage of your sales were made to distributors?
One sign of a pyramid scheme is if distributors sell more product to other distributors than they do to the public.
What were your expenses last year, including money you spent on training and purchasing products? How much money did you make last year — that is, your income and bonuses minus your expenses? How much time did you spend last year on the business? How long have you been in the business? How many people are in your downline?
It’s important to get a complete picture of how the plan works: not just how much money distributors make, but also how much time and money they spend on the plan, how long it takes to make money and how big a downline is needed to make money.
What percentage of the money you made — income and bonuses minus your expenses — came from recruiting other distributors and selling them inventory or other items to get started?
Another sign of a pyramid scheme is if the money you make depends more on recruiting — getting new distributors to pay for the right to participate in the plan — than on sales to the public."
For example, the questions could be redirected in such a way to mirror the uplines' recommended activities regarding training costs.
The FTC has been impotent in addressing these concerns, to the point of individuals starting a class action lawsuit to get Amway's attention (http://texsquixtarblog.blogspot.com/2010/11/amway-settles-pokorny-lawsuit.html) and Amway suing others using a SLAPP/frivolous lawsuit who are getting the truth out to other IBOs being financially abused (http://texsquixtarblog.blogspot.com/2010/08/amway-lawsuit-update-dont-mess-with.html), then getting counter sued for fraud (http://texsquixtarblog.blogspot.com/2010/10/amway-sued-for-fraud.html). These are only 3 of many other lawsuits in which a large company attempts to intimidate individuals with a much lesser financial ability to pursue these lawsuits for justice that the FTC should have corrected DECADES ago.
COME ON, FTC. WE PAY OUR TAXES FOR YOU TO PROTECT US FROM SCAMS LIKE AMWAY, START USING THIS MONEY WISELY INSTEAD OF FORCING US INTO THE JUDICIAL BRANCH TO GET JUSTICE!!!