| Comment Number: | 522418-11317 |
| Received: | 7/17/2006 10:18:01 AM |
| Organization: | |
| Commenter: | Eric Scheibeler |
| State: | PA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| Attachment: | 522418-11317.pdf Download Adobe Reader |
Comments:
July 17, 2006 Federal Trade Commission Office of the Secretary Room H-135 (Annex W) 600 Pennsylvania Avenue NW Washington, DC 20580 Re : Notice of proposed rulemaking Business Opportunity Rule 16 CFR part 437 Dear Commissioners: I respectfully submit the comments below in support of the proposed rule which is a vital step needed to protect consumers from the abuse of fraudulent business “opportunities”. There may be no industry more in need of appropriate disclosure requirements than the Multi level marketing industry. I am a former Federal Auditor that rose to a level that less than 1/25 th of 1% achieve in the Amway/Quixtar business globally. It sounds innocuous. At that level, I inadvertently discovered and documented literally billions in revenues being culled from consumers recruited through systematic, deceptive trade practices. I reported it directly to Amway/Quixtar Senior management and to Dick DeVos. Dick DeVos was then President and is the son of the billionaire founder. As a former Federal Auditor I wrote the book, Merchants of Deception, to be a meticulously well documented road map for the prosecution and to warn the public. Instead of getting the book published and profiting, I chose another tactical venue. I released the book for free on the internet from my web site www.merchantsofdeception.com . Tens of thousands of copies have been downloaded internationally. Consumer investor contacts have poured in from all of the US, France, Italy, Germany, Slovenia, Russia, China, Malaysia, Indonesia, Poland, Romania, Dominican Republic, UK, Ireland, Netherlands, Australia, New Zealand, Chile, Brazil, India, Philippines, Canada, South Africa and Thailand. Nearly all report being defrauded in a systematic manner. I have in excess of 2,000 lengthy victim testimonials and 24,000 on my e-mail distribution list and the number grows daily. Individual victims from all over the world claim losses ranging from a few thousand dollars to in excess of $80,000. There are cases of reported foreclosures, bankruptcies, divorces and five suicides to date. The documentation seems to reveal literally billions of dollars in aggregate, systematic fraud. My web site and book have become the global epicenter for victims of this particular business “opportunity”. Neither I nor millions of others would have invested in the scheme had adequate financial disclosures been in place. Amway/Quixtar present a highly deceptive “average gross income” of near $115 a month to prospective consumer investors when my nine years experience and supporting data show an almost 100% loss rate for consumers. Internal corporate documents also reveal an approximate 96% drop out rate over five years. This appears to be to be a consumer investment pyramid in a perpetual state of collapse, supported only by the recruitment of new, unknowing investors. The sole beneficiaries seem to be the owners of Amway/Quixtar and the Kingpins distributors who make up less than 1% of the distributor force. The Amway/Quixtar model is one that has been replicated among many other multi-level or network marketing companies. These must be differentiated from direct sales companies, which are mostly legitimate in nature. Since leaving Amway/Quixtar and exposing the fraud I have served pro bono on the boards of two consumer advocacy groups. I have been contacted by consumer victims of other multi level marketing companies, each of whom was defrauded financially in near identical multi level marketing business “opportunities”. Nearly all of these consumer losses would have been avoided with appropriate disclosures. Amway/Quixtar and its related Kingpin distributors were plagued with countless civil suits alleging fraud. Their response in the US was to force all of their distributors (consumer investors) who discover they have been defrauded into a binding arbitration process that is gagged so that the public will have no knowledge of the claims, method, manner or scope of the deceptive practices. These fraudulent practices were verified in a recent NBC Dateline undercover investigation in which I was able to gain their film crew access to public recruitment meetings. There is a great deal at stake here. My wife, my son and I have received death threats. Quixtar has filed a legal action in an attempt to keep me from speaking to the media and further exposing the plight of its consumer investor victims. Despite this, I request a hearing on the Business Opportunity Disclosure proposed rulemaking and will be prepared to testify with documentation of the above referenced matters. Thank you for your time. Best Regards, Eric Scheibeler