| Comment Number: | 522418-00439 |
| Received: | 6/1/2006 11:04:17 PM |
| Organization: | Shaklee |
| Commenter: | Charlene Westgate |
| State: | AZ |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
I am writing this letter to express my strong opposition to the proposed Business Opportunity Rule R511993. I understand that it is the responsibility of the Federal Trade Commission to protect the public from "unfair and deceptive acts or practices," but the rule as proposed would make it very difficult for me to operate my business as a Shaklee Independent Distributor. One of the most burdensome sections of the proposed rule is the 7-day waiting period to enroll new distributors. Most of the people who sign an application do so to purchase Shaklee products at a wholesale price. If they later wish to build a business, all they must do is supply Shaklee Corporation with their Social Security Number. There is no additional kit, fee or application required. The Shaklee Member Kit costs only $19.95—far less than most consumer purchases. In addition, the 7-day waiting period is unnecessary as Shaklee Corporation has a 90% buyback policy for products, including the Member Kit, purchased by a distributor within the previous 2 years. The proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. There are many problems with this proposed requirement. In this day of identity theft, I am uncomfortable giving out the personal information of other Shaklee distributors, without their knowledge or consent, to strangers. I believe that this would dissuade new people from signing up as distributors as they are concerned not only about identity theft, but also about their privacy. People today are understandably reluctant to share their personal information with individuals they may never have met. Further, providing a list to a potential recruit, who may already be a distributor for a competing direct selling company, may be an invitation to solicit existing distributors for such other opportunity. Finally, the 10-reference requirement is an administrative burden. In order to obtain the list of 10 prior purchasers, I will need to provide Shaklee Corporation with the prospective distributor's address, and then wait to receive the list of the 10 nearest distributors who became distributors within the past three years. Each prospective recruit will need a customized disclosure statement. This will result in a delay far longer than 7 calendar days before any potential recruit can sign an application and will be an undue hardship. The proposed rule calls for the release of any information regarding lawsuits that allege misrepresentation, or unfair or deceptive practices over a 10-year period. Regardless of whether the company was found innocent or not liable. Today, almost all business lawsuits claim misrepresentation or unfair competition. It does not make sense to me that I would have to disclose these lawsuits unless Shaklee Corporation, or its officers, directors or sales department employees, had been found guilty or liable. This rule would place 50-year old companies such as Shaklee Corporation at a disadvantage compared to start-up direct selling companies, which may not yet have experienced litigation but which are far more likely to have legal issues surrounding their opportunities. I have been a Shaklee Distributor for more than a year. I became a Shaklee Distributor because I love the Company's nutritional products and wanted to earn some additional income working from home. Now I depend on this extra income to supplement our earnings. While I appreciate the work of the FTC to protect consumers, I believe this proposed new rule has many unintended consequences for direct sellers and that there are less burdensome alternatives available to the agency to achieve its goals. Thank you for your time in considering my comments. Sincerely, Charlene Westgate