Business Opportunity Rule #535221-00040

Submission Number:
535221-00040
Commenter:
Robert FitzPatrick
Organization:
Pyramid Scheme Alert.org
State:
NC
Initiative Name:
Business Opportunity Rule

May 27, 2008 To: Members of US Federal Trade Commission From: Robert L. FitzPatrick, Pres. Pyramid Scheme Alert.org As president of Pyramid Scheme Alert, a consumer organization that investigates, analyzes and seeks to prevent pyramid schemes, I urge the FTC to cancel plans to enact the “business opportunity rule” as it is presently proposed. (http://www.ftc.gov/opa/2008/03/busrule.shtm). The proposed rule – which now effectively excludes multi-level marketing (MLM) schemes – would be meaningless, a waste of tax money, and useless in its stated purpose of protecting consumers. Whatever value such a rule might have provided the public was eradicated by the Commissioners’ decision to effectively exempt multi-level marketing schemes from its coverage MLM is, by every measure, the largest and most pervasive of all the types of business opportunity schemes. The remaining types that the rule would cover – envelope stuffing, vending machine routes, etc, – are insignificant, uncommon, and have little financial impact. The endless chain scam, sometimes called a Ponzi scheme or pyramid scheme, is the most common and most harmful form of fraud facing consumers today when they seek new business or income opportunities. Multi-level marketing is the most common – almost exclusive – disguise used by Ponzi perpetrators. Consumer losses in the US from these types of business opportunity scams are in the billions each year. There is hardly an American household today that does not have a member who has been solicited or who has lost money and time in a multi-level marketing “business opportunity” scheme that turned out to be an endless chain recruiting/investment scam. The effective exclusion of MLM serves to bolster and protect the worst and most common type of business opportunity fraud. Rather than protecting the public, the revised rule literally provides a safe haven for business opportunity frauds. It may even drive those scams that use other models to now adopt a MLM pay plan in order to gain protection under the rule. The Commission statement that MLMs will be covered by Section 5 of the FTC Act governing “unfair and deceptive practices” is equally meaningless, since the FTC’s record since 2001 in responding to consumer claims and requests for law enforcement against MLM scams reveals a political agenda to shield MLMs from federal law enforcement (see attachment). Respectfully submitted, Robert L. FitzPatrick, Pres. PYRAMID SCEME ALERT 1800 Camden Rd. Ste. 107, No. 101 Charlotte, NC 28203 rfitzpatrick@pyramidschemealert.org