Comments Needed on the FTC’s Proposed Business Opportunity Rule
The Federal Trade Commission is proposing a rule to protect consumers from bogus business opportunities and enhance law enforcement efforts in this area. The rule is intended to cover business opportunities commonly touted by fraudsters, while minimizing compliance costs for legitimate businesses [1]. The proposed rule defines business opportunity as a situation that includes (a) a solicitation to enter a new business, (b) payment or a promise of payment to a third party, and (c) an earnings claim or an offer to provide business assistance. The FTC uses the Franchise Rule and the FTC Act to attack fraudulent business opportunities. However, neither is specifically designed for the typical scams that occur with these schemes. The FTC’s Notice of Proposed Rulemaking states that “unlike most franchises, …
Continue Reading >FTC Proposed Business Opportunity Rule: Request for Comments
The Commission invites members of the public to comment on any issues or concerns they believe are relevant or appropriate to the Commissionâs consideration of the proposed Business Opportunity Rule. The Commission requests that factual data upon which the comments are based be submitted with the comments. The Commission is soliciting comment on the specific questions identified below. However, the questions are designed to assist the public and are not intended to limit the issues on which comment can be submitted. The comment period will close on July 17, 2006, and rebuttal comments are due by August 7th. Comments can be submitted online or on paper. Online comments are limited to 4000 characters in the body of the message, but additional documents can be attached. …
Continue Reading >Comments on the FTC’s Proposed Business Opportunity Rule
Attn: Federal Trade Commission Office of the Secretary, Room H-135 (Annex W) 600 Pennsylvania Avenue, NW Washington, DC 20580 RE: Business Opportunity Rule, R511993 Dear Sir/Madam: I am writing in response to the proposed New Business Opportunity Rule R511993, which is sorely needed to protect consumers from deceptive pyramid marketing schemes and chain selling schemes (for which I shall use the acronym âMLMâ for âmulti-level marketingâ) that have defrauded millions of consumers of tens of billions of dollarsâfar more than are represented by official complaints received by the Commissionâbecause victims rarely file complaints due to self-blame and fear of self-incrimination or consequences from or to their upline. (See below). My background and research applies directly to this disclosure rule. Let me explain why my comments, …
Continue Reading >FTC Proposed Business Opportunity Rule
The following definitions shall apply throughout this part: (a) Action means a criminal information, indictment, or proceeding; a civil complaint, cross claim, counterclaim, or third-party complaint in a judicial action or proceeding; arbitration; or any governmental administrative proceeding, including, but not limited to, an action to obtain or issue a cease and desist order, and an assurance of voluntary compliance. (b) Affiliate means an entity controlled by, controlling, or under common control with a business opportunity seller. (c) Business assistance means the offer of material advice, information, or support to a prospective purchaser in connection with the establishment or operation of a new business. (1) Business assistance includes, but is not limited to: (i) Providing, or purporting to provide, locations for the use or operation …
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