Business Opportunity Rule
I would like to respond to the letter submitted to the FTC on behalf of the Direct Selling Association on May 27, 2008. Most of the members of the DSA are MLMs that in practice are endless chain recruiting schemes where there are few customers and little retailing is going on. MLMs need to be included in the new Business Opportunity Rule. MLM’s are the very opportunities that cause the most harm to good, trusting folks desperate to earn money. 98% and higher loss rates make it clear there is deception and fraud occurring. For the DSA to say the rule “would have unintentionally swept in numerous commercial arrangements where there is little or no evidence that fraud is occurring [and that] the [proposed rule] would have imposed greater burdens on the MLM industry than other types of business opportunity sellers” borders on ridiculous. How is having full disclosure of earnings including average, high and low, time to achieve levels and dropout rates etc. something that should be excused for MLM companies? That honest disclosure published on company websites will cost very little and provide much needed protection for the public. The DSA also suggest that business materials, supplies and promotional items are sold by the company to reps and are a not for profit aid. That is misleading. Those items can be big money makers for the companies and top of the pyramid reps. Companies that hawk those products are also the very ones that need to be included in this new rule. Folks need to be protected from companies that con them into spending untold amounts to hawk the company’s products. The idea that companies that provide websites and/or links to their recruits should also be excluded from the rule is a serious concern. There is no legitimate reason to exclude them. They should have reasonable oversight and disclosure for public protection. Think how easily and cost effectively those websites could have a disclosure page. I would like to share my experience with Advantage Conferences / Timothy Darnell. He applied for membership in the Dallas Better Business Bureau. The BBB questioned whether he was running an illegal pyramid scheme, using copyrights and trademarks he didn’t in fact have and questioned the earnings representations. Tim Darnell’s response was to file a frivolous suit against the BBB. The BBB won with a Motion for Summary Judgment. Tim Darnell admitted under oath in 2006 that he had no retail sales of the conference product. On June 23, 2008 he admitted under oath he had 1 (one) retail sale of his main conference product. His Aussie 2-up boasts a 98% loss rate. Half of the folks spent $9,995.00 plus thousands in advertising, business expenses and attendance costs. Many of those folks lost $20,000.00 or much more because of this man and his top rep Jack Weinzierl. If folks had been given honest disclosure it would have saved people from devastating losses-- bankruptcy, loss of homes, sale of homes, sale of possessions, mountains of credit card debt, hunger and emotional harm. It is so vital that the public have some measure of protection. For the DSA to suggest that there is virtually no harm or fraudulent activity going on is patently dishonest. Should these MLM companies be dictating what is done or should the needs of the American public be the priority? The FTC has a mission to prevent fraud, deception, and unfair business practices in the marketplace. With that in mind I ask that the MLM industry be included in the new rule and the public be given the protection it deserves. I don’t want to see thousands more suffer devastating losses. Nor should honest citizens like myself that are advocating for consumers be targets for frivolous litigation to intimidate us and silence our voices.