| Comment Number: | 522418-06862 |
| Received: | 7/7/2006 6:33:58 PM |
| Organization: | Wellness International Network, LTD. |
| Commenter: | Ivan C. Camp IV |
| State: | TX |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| Attachment: | 522418-06862.pdf Download Adobe Reader |
Comments:
July 7, 2006 Dear Sir/Madam, We are writing in response to the proposed Business Opportunity Rule R511993, This proposed rule, if not modified, will be a significant impediment and burden to the network marketing industry and, although well-intended, will represent a significant burden to the free market trade. The Federal Trade Commission and Courts have outlined procedures for and have repeatedly confirmed and upheld the legitimacy of the multilevel marketing business opportunities. The safeguards that the Federal Trade Commission recognized in the Amway decision of 1979 distinguishes and confirms the legitimacy of legal multilevel marketing companies like Wellness International Network, Ltd (WIN), Mary Kay Cosmetics, Avon, and The Pampered Chef, to name a few. The proposed rule would require a de facto seven day waiting period to enroll new distributors. In essence, one would have to sell a person twice on the same business. While we support some of the disclosures with modification, we are opposed to a seven-day waiting period because it is an excessive burden to any company and its distributors and would be an impediment to new business development. Additionally, the proposed rule also calls for the release of any information regarding prior litigation and civil or criminal legal actions involving misrepresentation, or unfair or deceptive practices, even if one were found innocent. In today’s litigious culture, anyone can be sued for anything almost without impunity. Under the proposed rule, you would have to disclose the legal action and explain it to a new business associate which is patently unfair as the courts may have deemed it to be without merit or to be a frivolous lawsuit. As a result, we believe it fair to only support the disclosure of previous litigation of companies, executives, affiliated companies and the like involving fraud and misrepresentation only if the party is found guilty. If the defendant is found not guilty or if the opposing parties agreed to settle without admission of guilt, then it should not be necessary to disclose this information. If the parties agreed to settle without admission of guilt, there usually is public document available, particularly if it involves a government agency and further disclosure therefore would be unnecessary. Finally, the proposed rule requires the disclosure of a minimum of 10 purchasers in closest geographic proximity to the independent distributor. While it is a good practice to provide references of satisfied customers, this is a burden for small businesses and, as a requirement, can be a violation of personal confidentiality. Unfortunately, requiring the release of this information can threaten the business relationship of the references who may be involved in other companies or businesses. In addition, it subjects these references to cross-marketing by competitors. We are recommending that contact information for purchasers be available upon request, that their availability be published on company materials, and that due to Internet-marketing, they not be limited to geographic proximity. We believe this proposed rule exceeds what is necessary and needs significant modification. We live in a free market economy where people have the responsibility of making informed decisions based on best information. A better approach would be to provide consumers with objective criteria when analyzing a business opportunity and let an informed market proceed. Sincerely, Ivan C. Camp IV Director of Operations Wellness International Network, Ltd.