Business Opportunity Rule #522418-11754

Submission Number:
522418-11754
Commenter:
michael webster
State:
Not in the US
Initiative Name:
Business Opportunity Rule
To: The FTC Re: New Proposed Biz Op Law By way of background, I am lawyer in Toronto, Ontario who practices franchise law and I also have experience in prosecuting civil business opportunities frauds, payphone, atm, and point of sale distributorship frauds. The new FTC Business Opportunity Rule does reflect some good understanding of the psychology of business opportunity fraud. But ultimately, unless the disclosure documents are made public, in a manner similar to the caleasi site for franchise disclosure, the new rule will end up promoting more fraud and not less. The reason for this is simple: a business opportunity fraud will sue the disclosure document as "evidence" of being approved by the FTC. The proposed seven day cooling off period is too short for anyone to do serious due diligence, especially since the purchasers are only going to be seeeking evidence that confirms there initial bias towards the business opportunity. Without public disclosure, there is no chance of a secondary market for reputation being established. The FTC does not have the resources to check every business opportunity disclosure document, but by making these disclosure documents public the FTC allows for the possibility of a market solution: informed sellers of information concerning the reputation of the business opportunity sellers would attract purchasers who need timely evaluation of that information. It is not practical to think that the purchaser of a business opportunity will be able to perform the necessary due diligence in seven days. The 22 categories of deceptive marketing that are apart of this new rule, while highly important to the regulatory effectiveness of the rule, provide an important checklist for fraud - but a checklist that cannot be evaluated in seven days. Far better would be to have the business opportunity disclosure a public document to allow for a systemic marketplace evaluation of the opportunity and its marketing practices. Yours Truly, Michael Webster www.bizop.ca Psychology of Compliance and Due Diligence Law