| Comment Number: | 522418-09432 |
| Received: | 7/14/2006 2:34:26 PM |
| Organization: | Isagenix International |
| Commenter: | Jim Coover |
| State: | AZ |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
As the president and CEO of Isagenix International, a direct sales company, I am concerned about the proposed Business Opportunity Rule, R511993. I believe that in its present form, it could severely hinder our ability to conduct business. I encourage you to withdraw this proposed rule. Isagenix is a health and wellness company that develops and manufactures high-quality systems for cleansing and fat burning, nutrition, and skin care that are distributed through an independent network of approximately 100,000 Associates in the U.S., Canada, and Puerto Rico. Isagenix, established March 2002 in Chandler, Ariz., currently has annual revenues in excess of $100 million. While we appreciate the FTC’s desires to safeguard consumers, we believe there are adequate laws already in place to accomplish this important objective. This regulation would not only negatively affect our company, but also our approximately 100,000 independent Associates who are small business owners (60 percent women) engaged in legitimate sales of efficacious products. Specifically, the most potentially damaging requirements of this proposed FTC regulation are: • Require that the seller of a business opportunity (starting at $1, the $500 threshold is gone) provide a “disclosure statement” that would include information such as previous lawsuits, the number of direct sellers who cancel within two years, and a list of “references” i.e., purchasers of the opportunity in the previous three years. Although Isagenix is glad to provide references, in these days where identity theft is running rampant, we feel giving personal information to strangers is an invasion of privacy. By disclosing this information, you’re actually exposing people (especially women) to possible endangerment. In addition, this requirement would create huge logistical challenges and prohibitive administrative costs to support, given that our independent Associates may or may not have referrals within a reasonable proximity. • Require that those disclosures be given at least seven days before any prospective purchaser signs a contract or makes payment to the seller. The seven-day waiting period to enroll new associates casts all direct selling companies in a negative light. (By the way, you can buy a gun in this country with only a three-day waiting period.) There is no product purchase requirement to become an independent Isagenix Associate. Isagenix allows individuals to join for just $49, which entitles them to a full-year of support via an online management system. Consumers purchase many items that cost much more than that (TVs, cars, etc.) and do not have to wait seven days. This waiting period might create the impression that there’s something wrong with our company. This waiting period is also unnecessary because Isagenix has a 100 percent 30-day customer satisfaction guarantee for retail customers and new Associates. Isagenix also has a buy-back policy where Associates can return their most recent order for a refund. Under this waiting period, this change would require Isagenix and our Associates to keep burdensome records. • Require business opportunity sellers who make earnings claims to provide an additional “Earnings Claim Statement” to prospective distributors, which would include extensive earnings disclosures which would need to be frequently updated. • Create new definitions of “business opportunity,” “business assistance” and “earnings claim,” creating broad language to encompass many direct selling practices. Ultimately, this is a regulation that will hurt small business—which is the backbone of the U.S. economy. Gross annual revenues for the direct selling industry alone are approaching $30 billion annually. This regulation will add tremendously to the cost of administration for our Associates and our company. I believe the current $500 threshold should be maintained and request that the FTC withdraws, or at least amends, the proposed Business Opportunity Rule, R511993.