| Comment Number: | 522418-05482 |
| Received: | 7/1/2006 3:18:54 PM |
| Organization: | Quixtar |
| Commenter: | Danna Hayes |
| State: | AZ |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
I absolutely agree with stopping fraudulent businesses that take advantage of people in hopes to make large amounts of money. However, I am not sure that the new regulations set forth in your proposal will help at all. Instead it will limit the legitimate marketing businesses, as they will adhere to the rules while the fraudulent businesses will simply "follow the rules" by making up more fraudulent figures about their business. For example, it is my understanding that it is already against the law for direct marketing businesses to offer moneys to "upline" for simply registering someone else, and that they MUST offer buy backs of all products bought up to 180 days. I know of quite a few "businesses" out there right now that already do not follow these rules. Fraudulent companies know their time is limited and try to get as much money from people in their short time around. They start companies, claim to be the "fastest growing MLM" or claim they have "the new miracle product," get people to join to get their money, and close down before even being noticed by the FTC--then move on to the next great product, start a new company, get people to join, etc. Since they are around for a short time, they break the rules already in place to get their job done. Adding new rules will not do anything to them! They will just break them as well. Meanwhile, legitimate companies again suffer because of the fraudulent ones as only the legitimate companies follow the rules set forth by FTC anyhow. (Quixtar does adhere to FTC rules; they explain them very well in the business reference guide given to every new IBO.) I do not believe new rules and regulations are the answer at all. You already have wonderful rules and regulations in place, the big one being the 180-day product buy-back guarantee policy. If a direct marketing company is legitimate, this policy will be in place. Simply enforcing that one rule will solve many of the problems. If people find out that the company is not what they thought, they have 6 months to get their money back, as with Quixtar. This is taking the risk of being taken advantage of when joining a network marketing company, even if they do make the decision the same evening as hearing the plan--they have 6 MONTHS to change their mind. I would love to see an easier way to report companies that do not offer this buy-back policy (such as a web-based information questionnaire that someone can go to and fill out if they find a company that does not offer that buy-back--giving company name, website information, etc.,) and to then see the FTC actively stop these companies. In summary, fraudulent companies do not follow rules. All new rules will, therefore, also be ignored. I am sure you will already get plenty of letters stating how the proposed rules will affect Independent Business Owners of legitimate companies. Therefore, setting forth the new rules will in effect only harm the IBOs that are with legitimate companies, making a legitimate living. They will not touch the fraudulent companies. I ask that you to, instead, enforce the 180-day buy-back rule as this takes the risk out of joining a network marketing company. Find ways of stopping the "businesses" that do not offer this buy-back, or make them add this buy-back policy and have them inform any past recruits that this is now available to them if they have not been pleased with the business, and you will then effectively stop many of the fraudulent companies that exist WITHOUT harming the legitimate companies and IBOs that already have the rule in place. P.S. I already know of two--Agel and Xocai (MXI Corp.) They both do not have buy-back policies and offer money for simply finding new recruits-- stop the companies already breaking the wonderful rules you already have before adding new rules that will be even harder to enforce.