|Received:||7/17/2006 2:00:35 PM|
|Subject:||Business Opportunity Rule|
|Title:||Notice of Proposed Rulemaking|
|CFR Citation:||16 CFR Part 437|
Comments:Mark Zuckerbrod California July 12, 2006 Federal Trade Commission Dear Sir or Madam: I am writing to express my concerns with the FTC’s proposed Business Opportunity Rule R511993. I have been an Herbalife distributor and using the Herbalife products since December of 1980 (almost 26 years). I joined the company for the opportunity to work for myself in an entrepreneurial environment as well as the opportunity to be in a field where I could help people with their health and weight…something I could feel really good about. Selling Herbalife products and building a team of productive distributors has allowed me to work from my home, spend more time with my family and also make a very nice living over the years. I certainly understand and support the FTC’s idea of providing safeguards to prevent people from becoming victims of business opportunity fraud, however based on my 25+ years of experience, I feel that the proposed regulations will potentially cripple the recruiting and team building aspect of our business. People sign up with Herbalife and other direct sales companies for a variety of reasons. Some just want to get products for a discount. Others want to make a few hundred dollars a month for a set period of time to pay for a specific item or event for their family. Often, those people then stop pursuing the business! Still others are looking for a longer term part time business, and a certain percentage start the business with the intent of making a full time living. In all of these situations we have to remember the reality of people’s lives, and how their personal circumstances affect their ability to stay focused and continue to work in the business. We have to remember that in almost all cases, direct selling is a secondary source of income and NOT the priority in their lives. As a result of people’s personal situations and distractions etc…many people that leave the business don’t actually quit. They aren’t unhappy with the business. They often just float away and disappear because their lives get in the way. (Some examples of this are divorce, illness (theirs or a family member), death in the family, getting busy at their full time job, moving, etc…..) As a result of these facts, the numbers who “quit” look much worse than they really are. By requiring Herbalife to provide a list of distributors who cancel or quit (their distributorships expire and they don’t renew), an extremely skewed picture of the opportunity will be presented to the prospective distributor which will badly hurt our business. In addition, the 7 day rule would dramatically impact our business. When people want something, they generally want it right away. If we made them wait 7 days after hearing about the business, many people would just drift away. By not trying the products and learning more about the company, the products and the opportunity, they would lose their excitement and a good percentage would not still be around. An alternative to this would be allowing them to sign up, but give them a right of rescission for a certain numbers of days so they could return everything if they don’t want to pursue the business. This would be no different than the way many other purchases are treated. Another thing is worth pointing out. If I had signed up for a direct sales business and then decided not to pursue it (for whatever reasons), I would be very upset if that company gave my personal contact information to all the new prospects in my area for the next 3 years! I would personally be very upset and angry if my information was given out to any strangers for any reason for any period of time. It would be a violation of my privacy and very annoying to have people calling or emailing me all the time. It also creates the potential for my personal phone number and e-mail to end up being sold to 3rd parties by the “prospects” acquiring this information. Any rule that would require this would probably upset thousands of people around the country that had been in Herbalife and hundreds of thousands who had spent some time with other companies in the direct selling industry. They would be upset with Herbalife International (or whichever company gave out the information) for giving out their personal information and upset with the FTC for requiring it. Lastly, to the best of my knowledge, almost every major company in America is currently being sued. Many are being sued dozens of times simultaneously. It doesn’t make these bad companies. In our suit happy country, anyone can sue a company or individual for almost any reason. By requiring that direct selling companies disclose to all new prospective distributors all lawsuits they have been involved in for a period of years regardless of their size, whether they were found innocent or guilty, or the lawsuit settled with no acknowledgement of wrongdoing, is patently unfair. It will create a huge bias against these companies without the prospect ever really knowing or understanding the real facts behind the accusations in the suits. If a company is convicted of criminal conduct that is one thing, but to have to list lawsuits without 1000’s of pages of qualifying information and explanation (which is totally impractical) will do great damage to the direct selling industry. As I mentioned in the beginning of this letter, I fully support the FTC’s goal of preventing consumer fraud, however I think the agency needs to revisit the specifics of its proposal to take into account the damage that would be done to hard-working direct sellers like me and millions of others. I believe that if enacted in its current form, proposed Business Opportunity Rule R511993 would not only badly harm all of the individual direct sellers around the country, but also make prospective direct sellers so fearful that they would no longer consider a business that could have greatly helped them and enhanced their lives. This could potentially have a significant impact on portions of the U.S. economy and hurt the very people it is meant to help. Sincerely, Mark Zuckerbrod P.S. A hardcopy with my contact information has been sent by regular mail.