Comment Number: 522418-00656
Received: 6/3/2006 2:42:29 PM
Organization:
Commenter: Kutz
State: OH
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 FTC 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 confusing and burdensome parts 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--they are solely consumers of the products. If they later wish to build a business, all they must do is supply Shaklee Corp with their SSN or Tax ID. There is no additional kit/fee/application required. The Member Kit costs only $19.95. This is far less than most consumer purchases, from TVs to all types of household appliances, none of which require a 7-day waiting period. In addition, the 7-day waiting period is unnecessary in that Shaklee Corp already has a 90% buyback policy for products, including the Member Kit, purchased by a distributor within the last 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 info of other Shaklee distributors, without their knowledge/consent, to strangers. I understand that those who sign up after the rule takes effect would be told in about it in writing. 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 reluctant to share their personal information with individuals they may never have met. Providing the 10 references also could damage the businesses of numerous Shaklee distributors. Lower ranking distributors often are involved in more than 1 direct selling company. 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. The 10 reference requirement also is an administrative burden. In order to obtain the list of 10 prior purchasers, I will need to provide Shaklee Corp with the prospective distributor's address, and then wait to receive the list of the 10 nearest distributors who became distributors within the past 3 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. Since most people enter direct selling part-time to earn extra income for a specific goal, such as holiday purchases or a family vacation, the long wait which the proposed rule may make the goal unattainable. The proposed rule calls for the release of any info regarding lawsuits that allege misrepresentation, or unfair or deceptive practices over a 10-year period. It does not matter if the company was found innocent or not liable. Today, almost all business lawsuits contain claims of misrepresentation or unfair competition. It does not make sense to me that I would have to disclose these lawsuits unless Shaklee Corp, or its officers, directors or sales department employees, had been found guilty or liable. Otherwise, 50-year old companies such as Shaklee Corp and their distributors would be placed at a disadvantage compared to start-up direct selling co's, which may not yet have experienced litigation but which are far more likely to have legal issues surrounding their opportunity. I appreciate the work of the FTC to protect consumers, but I believe this has many unintended consequences for direct sellers & that there are less burdensome alternatives available to the agency to achieve its goals. Thank you for your time. Sincerely, Jennifer Kutz