Submission Number: 00006
Received: 1/11/2011 4:13:53 PM
Commenter: Bruce Craig
State: New York
Agency: Federal Trade Commission
Initiative: Trade Regulation Rule on Disclosure Requirements and Prohibitions Concerning Business Opportunities - FTC File No. R511993
Attachments: No Attachments
I filed comments to the original Business Opportunities rule, since then I understand that the Commission has essentially removed MLM marketing from coverage under this rule under the premise that problems in this area can be handled under Section 5 proceedings. PP 20-21 Staff report.
I would have to concur with Mr. Jon Taylor who has stated that there is ample evidence of problems with MLM to warrant inclusion in the rule. The receipt of 17,000 comments from current MLM distributors is hardly justification for the commission's position.
Furthermore, a Section 5 action is always substantially after the fact, where restitution of lost investments is much more difficult to obtain than deterrence prior to the act, as accomplished by the Rule. A section 5 action also normally fails to definitively set forth prohibited conduct in a manner which is of value to enforcement officials in subsequent proceedings and businesses that wish guidance as to the legality of their practices. The commission has direct experience in this respect in its pyramid litigation, which has failed to fully compensate victims or create a finite standard which can be universally applied.
Bruce A. Craig Esq.