Business Opportunity Rule #535221-00003

Submission Number:
535221-00003
Commenter:
Johnson
State:
TX
Initiative Name:
Business Opportunity Rule

I don't have an issue with handling MLM's separately from other business opportunities. As I previously communicated in my comment 522418-04681, submitted 6/27/2006 11:05:25 PM, there is still a significant issue that should be considered whether a particular business qualifies as an MLM. Specifically, the Quixtar business is the "bait" and the tool profit business is the "switch", in an elaborate bait-and-switch scam. The Quixtar MLM masquerades as a legitimate MLM, but the bulk of the profit comes from the tool profits. This results in most IBO's having a net loss or barely breaking even, while the upline rakes in literally millions of dollars per year via the tool profits, far in excess of what could be attained via the marketing plan shown, as the tool profits are not a normal part of the marketing plan. It is curious the upline often claims Quixtar does not allow them to dilvulge the tool profit information, yet Quixtar is apparently powerless to insist the tool profits be included as part of the marketing plan, the point co-founder Rich DeVos had the strongest words about in his 1983 "Directly Speaking" recordings. There is either an extremely illogical combination of ideas present, or a planned partnership has developed between Quixtar and the high level IBO's who run the tool companies. It is curious a recent telephone discussion with Quixtar executive Ron Mitchell resulted in comments Quixtar now considers the secret tool profits to be "free enterprise in action", and "the level of tool profits is not an important issue", which is diametrically opposed to the Rich DeVos statements and logic. It is critical to understand the nature of the relationship between the upline and their group IBO's is one the upline describes as "teammates" and "business partners", and this and similar language is used not only with IBO's, but with prospects seeing the marketing plan. Nothing could be further from the truth, as "teammates" and "business partners" would not institutionally hide secret tool profits from their IBO's. Thanksfully, it is known a significant level of tool profits are made by the upline, often multiple times their Quixtar income, because of the facts showing up on the internet. However, much more needs to be done to rectify this situation. Some of the issues the bait-and-switch problem creates are: 1. Upline lifestyle is often used to attract and sustain IBO's, and theses lifestyles are often NOT a result of the marketing plan opportunity, but the secret tool profits. Thus, there is a conflict of interest created. 2. Upline businesses are often not sustained, but their lifestyle EXCEEDS the amount of money they would make if they DID maintain their level. Again, the conflict of interest is significant. 3. Largely because of the tool prices, most IBO's operate at a loss, making the opportunity a very poor one and not anything close to what is shown in the marketing plan. My suggestion is the FTC ensures an MLM qualifies as an MLM, based on whether the marketing plan shown to IBO's and prospects significantly represents the business opportunity, or whether there is a bait-and-switch operation in the background. This is an elaborate situation, being refined over several decades of "tuning." For example, the rules state money is made via the tools by some IBO's, but the level of profit is unknown. Also, the rules state the tools are optional, but little to no help is given to those who do not buy the tools. This has been my personal experience, as I was treated very nicely and included in various activites until I stopped ordering the standing order tools. A return policy is in place, but the return policy is only for tools newer than 6 months, a timeframe few IBO's who buy these tools exceed. Most IBO's leave the business unaware they were ripped off, as it is hammered home the reason they didn't succeed is THEIR fault, not for the real reason, the bait-and-switch tool scam. Thanks.