| Comment Number: | 522418-09161 |
| Received: | 7/14/2006 12:20:47 AM |
| Organization: | XANGO |
| Commenter: | White |
| State: | GA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
In reference to “Business Opportunity Rule, R511993”, I appreciate the FTC placing the high priority that it does on consumer protection, and I understand there are fraudulent groups and individuals out there, but I believe this rule unfairly targets legitimate direct selling businesses, and if adopted would deal a crippling blow to the direct sales business model. I’ve been in direct sales for about 2 yrs. During that time my business has spread into more than 24 states and 2 foreign countries. One of the most inviting aspects of this business to me was the low investment required to get started... $35. Lifting the $500 threshold unfairly lumps a $35 business venture in with a $350,000 one, requiring many companies to comply with rules that are not appropriate to them. This is not an apples-to-apples comparison. I think the $500 threshold should remain in effect. The part of the rule that would require finding the “10 nearest existing sales people” places impractical restrictions on my ability to recruit new distributors that do not live in the same geographical region as me, it creates privacy & safety vulnerabilities for all involved as well as the possibility of corporate liability for ID theft. Since I don’t know where prospects live before meeting them, it is impossible for me to have this information available until sometime after meeting them. This requirement unfairly exposes my personal information by making it available to anyone who even acts interested... including competitors who could fraudulently use it to their advantage by recruiting people whose names they received from my company. Also, with ID theft being an ever-growing problem, I don’t want to see anything put into effect that will increase that possibility any more than what already exists. This rule increases the potential for ID theft. Inherent to the direct sales business model is the concept of momentum generated by enthusiastic newcomers who are eager to share their enthusiasm with friends and relatives. This enthusiasm will be squelched by the seven day waiting period. In addition, the imposition of this requirement will create an air of suspicion among prospects, and it will also be a tremendous inconvenience in situations where I’m trying to recruit on the road and build my business away from home. To me this part of the rule suggests a level of risk that just doesn’t exist with my company (and many other direct selling companies) due to minimal up-front financial investments and generous return policies. Prospective purchasers can join quickly and easily with little or no risk. I would like to see that continue, but I believe the seven day waiting period will severely hamper this area of my business. With regard to the requirement that distributors disclose all legal actions, regardless of the outcome, I think this requirement should, at a minimum, be modified to exclude legal action(s) that are not related to the business opportunity and those that were favorably resolved for the distributor. In the latter case, if not exclude them, at least require that the outcome be part of the disclosure. I understand the intent behind the requirement to disclose cancellation & refund data, but disclosure of that information can be extremely misleading to prospects, raising unwarranted suspicion and concern on their part. There are many reasons for someone canceling an order or distributorship or requesting a refund, only one of which would be that there is something “wrong” with the company or product. For example... someone may decide to pursue other interests, so they return some product they had not yet used. People return product when they order too much for some reason and then decide they don’t need that much. These are legitimate reasons for cancellations and refunds and do not reflect negatively on a company, but they would be erroneously viewed as negative under this requirement. Thanks for the opportunity to voice my concerns.