Comment Number: 522418-09217
Received: 7/14/2006 3:12:23 AM
Organization:
Commenter: Floyd Ito
State: CO
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
No Attachments

Comments:

I agree that consumers need to have access to all the information they need to make a good decision about participating in any direct selling business. Industry-wide disclosure requirements would help shut down bogus companies that may try to copy legitimate companies. What is needed and a challenge to the FTC is to design a rule that prevents deception without penalizing independent business owners (IBO) associated with legitimate companies. As an IBO associated with Quixtar and its predecessor, Amway, for almost 24 years, I feel some provisions of the rule as currently written will hinder the growth in our business unnecessarily. Although I have not built the business to a level I would have liked, I am continuing to build so it will provide me a comfortable retirement. Through various job losses, including one as a senior geophysicist, my retirement income will be essentially what social security benefits I would be entitled to. I know I can have that comfortable retirement as an IBO with Quixtar. We have 2 children who wanted to become IBOs in our business when they were seniors in college. They continue to renew each year and receive the benefits accorded them. Because of success principles taught in the business, they have successful careers outside of the business. In our business it is not just about making money, but developing strong, positive, caring people who contribute to their communities and help others in need. Here are 3 provisions I take issue with and should be eliminated. 1. Prospects would have to wait seven days after receiving disclosures before they could register. People need varying amounts of information to make a good decision depending on previous life experiences. Some are ready to become involved immediately and some take more time to decide. Those ready to become involved immediately should not have to wait for any period of time to receive the benefits of owning their own business. We make it a practice to give them all the time and all the information they need to make a sound decision. In our business, there is money back guarantee if they are not satisfied. 2. You would be required to give every prospect a list of "references" - names, addresses, and phone numbers of 10 other IBOs in the area - seven days before the prospect registers. This would infringe on the privacy of every IBO for whom information was provided. The pending sponsor would be risking the possibility of the prospect being registered by one of those 10 IBOs, thus penalizing the pending sponsor. The prospects are given ample opportunities to meet other IBOs at various meetings that go on frequently and speak with them freely. 3. You would have to give every prospect a list of all lawsuits, arbitrations, and other legal claims for the past 10 years involving Quixtar and it IBOs where the plaintiff alleged fraud, misrepresentation, or other unfair trade practices - regardless of whether or not the accusation was true. Take any large, successful business, like Wal-Mart or Target or Microsoft. At any moment in time they may have hundreds of lawsuits pending of which an overwhelming percentage will be judged in their favor. In other words, they are hit with frivolous lawsuits and false accusations. The following provision should be more clearly defined. You would be required to provide prospects with personal financial documents to back up ("substantiate") any income claim. IBOs should possess substantiation for any claim but should not be required to disclose it except when required by the FTC and similar state agencies in an agency investigation. Again, I believe that providing every prospect with important information for them to make a sound business decision is good for Quixtar and the entire direct selling industry. However, I feel there are less burdensome ways to accomplish that goal than the manner set forth in this proposed rule.