|Received:||7/17/2006 11:55:27 AM|
|Subject:||Business Opportunity Rule|
|Title:||Notice of Proposed Rulemaking|
|CFR Citation:||16 CFR Part 437|
Comments:My name is Mbuyi Khuzadi. I run a private business affiliated with the Quixtar business opportunity. It has recently come to my attention that the FTC has proposed new guidelines to make sure that consumers have all the information they need to make a good decision about participating in a business opportunity. I agree with this lofty goal – in my business, we already provide prospective Independent Business Owners (IBO’s) with extensive information before they register. In fact, a set of uniform, industry-wide disclosure requirements would help eliminate predatory or illegal business opportunities that may try to mimic legitimate direct selling opportunities. However, the FTC’s original proposal contains several requirements that would impose crippling burdens on my business. The worst part about it is that it would not affect deceptive or illegal businesses. I believe these provisions must be changed in any final rule as follows: Problem 1: The proposed rules would require a seven day “cooling off” period for prospects. This is serious because those businesses that can sponsor immediately will be illegal, enhancing the chance that prospective business owners would be quickly added to the ranks of illegitimate businesses. Our solution is to eliminate the waiting period when a prospect can get his money back if not satisfied. This is what we do now. Problem 2: I would be required to give every prospect a list of "references" – the names, addresses, and phone numbers of 10 other IBOs in the area – seven days before the prospect registers. That would require me to infringe on the privacy of every IBO whose name, address, and phone number was provided to prospects. Furthermore, it would also penalize me, who would be required to give his prospect contact information for 10 other IBOs, any of whom might be happy to register the prospect themselves. This requirement should be eliminated all together. Problem 3: I would have to give every prospect a list of all lawsuits, arbitrations, and other legal claims for the past 10 years involving Quixtar and its IBOs where the plaintiff alleged fraud, misrepresentation, or unfair trade practices – regardless of whether or not the accusation was true. This is a completely unwieldy requirement – it would be impossible for me to catalogue any such legal claims for anyone except those which I have been party to (there have been none to date). In addition, this requirement would open up Quixtar and other legitimate companies to false accusations while dishonest companies would simply ignore the rule. This requirement should be eliminated all together. Problem 4: I would have to make a different disclosure for every income claim – which would make any presentation I gave improperly long. Every level of achievable success would require one, causing a tremendous burden to myself and my organization. It might not be possible to give a reasonable presentation of income potential due to the impossible nature of the disclosure requirement, crippling my business substantially. If disclosures are needed, such a requirement should include only a simple, standard, easily understood disclosure such as "average monthly gross income for 'active' IBOs." Problem 5: I would be required to provide prospects with personal financial documents to back up ("substantiate") any income claim. While this should be available to the FTC or similar state or federal agencies when performing an investigation, providing personal income statements is only relevant when selling a business, which is very different from proposing to aid someone in establishing their own business. Today, we provide every prospect with important information about prior experiences - this goal can be accomplished through much less burdensome methods.