Comment Number: 522418-04291
Received: 6/26/2006 12:45:43 PM
Organization:
Commenter: Larry Claypool
State: OH
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
No Attachments

Comments:

Federal Trade Commission/Office of the Secretary, Room H-135 (Annex W) Re: Business Opportunity Rule, R511993 600 Pennsylvania Avenue, NW Washington, DC 20580 RE: Business Opportunity Rule, R511993 Dear Sir or Madam: I am writing this letter because I am concerned about the proposed Business Opportunity Rule R511993. I believe that in its presented form, if adopted, this rule would indeed have a devastating impact on the direct sale industry and require significant changes to our business model and sales methods. It could prevent me from continuing as a distributor for the XanGo™ LLC Company. The Rule R511993 would destroy my small business. I have been an Independent Distributor with XanGo™ LLC for 3 years. I am a 5k distributor with an origination of 3200 people and many of these family distributors depends on this extra income to supplement their budget. This rule would also have a devastating impact on their budget and would destroy their small business and mine too. Originally, I started my Network Marketing business because of the Mangosteen product; I loved the product and wanted to earn some additional money. Now my family depends on this extra income to supplement our budget. Please do not destroy my small business we need it! Some of the sections in the proposed rule would make it hard or almost impossible for me to sell my Mangosteen product and services for XanGo™ LLC. 1. Seven day waiting period This waiting period will give the public the idea that there is something wrong with our plan or me and would reflect badly on me. I also think this seven-day waiting period is unnecessary, because XanGo™ LLC already has a 100% buyback policy for the first 30 days of all mangosteen products. The sales kit purchased by a New Distributor is not included in this buyback policy. One of the most difficult sections of the proposed rule is the seven-day waiting period to enroll a New Distributor. Xango LLC sales kit only costs $35.00. People buy TVs, cars, and other items that cost much more than that and they do not have to wait seven-days. Under this waiting period requirement, I will need to keep very detailed records when I first speak to someone a prospect and will then have to send in reports to my company. I am a small home business and this burden would hurt or destroy my business. This proposed rule is bad. 2 List of nearest references Finally, the proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. I am glad to provide references, but in this day of identity theft, I am very uncomfortable giving out the personal information of individuals (without their approval) to strangers. Predators are looking for ways to get names etc, and this could “open the door “for them. In the end, the rule must bind the FTC to take direct enforcement action on sexual and racial attacks with a special unit assigned to monitor actions related to the disclosure forms. 3. Earnings claim statement This requirement will not deter fraud. I have seen many frauds or scams on the Internet and been approached by many crooks because of my success. This rule will do nothing to stop them. Look at the Enron scandal people lost their whole livelihood and there were laws to keep that type of fraud from happening but it did. Not all the new laws in the world will deter fraud or scams. This rule will not stop Crooks – they violate the current rules all the time. While XanGo LLC strongly supports the proposition that earning claims made by their distributors should be substantiated, this requirement will not deter fraud. A fraudulent company will not provide accurate data, while legitimate distributors will have difficulty in meeting the proposed requirements. 4 Legal actions The proposed rule requires that distributors disclose all legal actions, regardless of the outcome, concerning “misrepresentation, Fraud, securities law violations, or unfair or deceptive practices” during the previous 10 years. Rule, R511993, dose not distinguish between Civil and Criminal cases to general public. It is unfair that it does not distinguish between winning and losing lawsuits. Thus, litigation that was favorably resolved for the distributor, or is otherwise irrelevant to the recipient of the disclosures, would still need to be provided. At the very least, this requirement should be modified to take into account these problematic elements. 5. Cancellations and refunds The proposed rule would require that distributors disclose the total number of purchasers of the business opportunity in the last two years and the number of oral and written cancellation requests during that same period. While XanGo™ LLC would have to maintain and update this database for its distributors, its disclosure can be misleading due to the fact that distributors often join to achieve specific, short term objectives, leading to a high cancellation ratio that is not representative of the satisfaction of the average new purchaser. Some people think that by buying a starter kit that is all they have to do to get started in their home based business. It is the very least thing they will have to do. They will have to put money in to the business to get it started. We cover with each good prospect what they will have to do. There are millions of good prospects in the U.S. but how about more enforcement of laws on the books to stop Crooks from stealing them from good hardworking MLM Distributors! The FTC’s proposed Rule, R511993, would unfairly target legitimate direct selling businesses people. However, I am a good American citizen and Rule, R511993, will hurt my business! Thank you and please help me. Vote NO to Rule, R511993. Sincerely, Larry E Claypool