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July 1, 2006
Will You Comment to the FTC?
By Drew in Miscellaneous
Recently the FTC has made a proposal to make some rule changes that will require more disclosure from MLM companies to their prospects before they sign up. Being one who started blogging to give others the full disclosure I never got, naturally I was quite pleased when I heard this.
At this stage the FTC is taking comments or as they would say it:
The Commission invites interested parties to comment on a proposed Business Opportunity Rule which would prohibit business opportunity sellers from failing to furnish prospective purchasers with material information needed to combat fraud and which would prohibit other acts or practices that are unfair or deception within the meaning of Section 5 of the Federal Trade Commission Act.
Scott Larsen has put up a page on his website detailing some of the provisions that are contained within the new rule proposal. Larsen has also put on that page some tips on what to write to the FTC about. Consider them if you like or you can just tell the FTC what you think of the new rule and whether you believe it is a good idea or not.
So go on over to the FTC webpage and make your comments then let us know whether you think the FTC will implement this rule, and tell us if you are for or against this new proposal and why?
Comments
I have already made comments. I think the FTC will approve the rule, but keep in mind it is Notice is 44 pages long, and the exact wording is undergoing comment consideration at this time.
My major comment was to ensure the tool profits, which make up the vast majority of the net income for this business for a very small minority of high level pins, are part of what is required to be shown when presenting the Q plan. Think about what a better business Q would be with this information known. I think it would drastically lower tool prices (tapes/CD's, books, functions), as the "kingpins" would no longer be able to get away with the abuse they are now.
I would encourage everyone else to make similar comments to the FTC, whether you are a current IBO, a former IBO, a prospect, or just visiting this site.
Halelluya! Finally...
Here was my input to good ol' Uncle Sam via the FTC:
Simply put from my experience in MLM - I would require MLM's and their downline to have the same standards and disclosure requirements as franchises have when selling a franchise to a prospective buyer.
Also - there should be strict disclosure on MLM lines of sponsorship who sell CDs and training. A new recruit should be able to know if the up line of sponsorship is making money off the training they offer in their line of sponsorship. It is criminal for an MLM seller to show material items that were supposively bought by the MLM business, but in fact much of the money made to buy the riches came from the CDs or seminars the upline sold to there downline.
I agree - AmQuix would be a much better place for Folks to sell soap and juice!
I sent my comments:
To start, I have been involved with Amway/Quixtar through the BWW organization. I have also examined many other MLM buz opps and am considered an active critic of BWW/Quixtar at www.bwwsot.blogspot.com. I have many details posted on that site as well as several articles at www.quixtarblog.com under the internet name "Xanadustc".
I was involved from December 2000 to August 2004. In that time, I had gone into great debt at the counsel of upline particpants who kept saying that I was doing the right thing and success was right around the corner. I told the upline directly that I was not comfortable buying items on a credit card and intended to stop. They insisted that I keep it up because once I reach that certain level, I would be able to pay all that debt off in one month. With the influences of the 'training' system, the participants, including myself, believe this. I do accept responsibility for my actions. I could have tried to recoupe losses, ask for donations, or put ads on my website, however, I have not done so. That being said, the upline of that business also holds some responsibility, and I ask that they take responsibility of their own in the form of ceasing activity relating to sales of excess training materials.
A brief note about training materials, I have over 380 tapes of which over 325 are nothing about 'training', but simply motivations. These were accumulated by participation in the Standing Order Program of which the team taught that failure to participate would mean failure in the business. Since I wanted to succeed and I knew very little about business, I listened to the upline causing a net loss in over $25,000 over four years. The breakdown is this:
BWW / Business costs: $10,337.62
Quixtar Income: $1,044.76
Quixtar Shipping Fees: $466.16 (Note this only 2001-2003)
Income from Customers: $158.73
Quixtar purchases (many purchases made to reach higher pin levels, most items of which are far more expensive than comparible items in a store):$15,003.88
After much study, I am led to believe that many of these companies practice either subtle or direct deception in recruiting. I need to set up the definitions that I would like to use:
MP is the current participator of the MLM.
Prospect is a person who the MP is talking to about the said business.
I would like to propose:
1. MP fully discloses the name of ALL associated businesses. I say this because many of these companies or training organizations play a 'name game' to hide the company name they are dealing with. This is often called the 'curiosity approach'.
2. Full and actual income statements and earnings be submitted to Prospect for the entire upline which MP belongs.
3. For participants of motivational or training organizations, income from supplied 'training' materials be limited to no more than 10% of the income from the MLM company itself.
4. Give the prospect a 7-10 day MANDITORY period of time to review the materials about the business WITHOUT contact from anyone in the group (within reason). This is because many of the training tapes teach to never let the person go without seeing you or hearing from you for longer than 48 hours so that the excitement does not die.
5. Require that all MLM companies publically publish recruitment and drop out rates for the previous years.
6. Require that all MLM companies publically publish the income earnings paid out per level as well as the actual number of people at that level in that year.
7. Require that recruitment materials rely on information about the company, not an emotional presentation to stir up feelings of failure in the prospects. (All MLM recruitment meetings I have observed were about the failing of the American Dream until the MLM company comes and saves the day).
Thank you,
If you have any questions, my email address is:
xanadustc@hotmail.com
I too, sent in my concerns about amquix.
I've sent comments to the FTC :)
I ask that they take responsibility of their own in the form of ceasing activity relating to sales of excess training materials.
Quixtar is providing a way via the website for IBOs to make comments to the FTC regarding the proposed:
Requirement of a 7-day waiting period
Requirement to provide references
Requirement to provide a litigation list
Requirement for specific earnings disclosure
Requirement for financial substantiation
The site lists questions on each point to prompt IBOs on what they might include from their own experiences.
See details here (password protected)
https://www.quixtar.com/business/ftc/comment-guidelines.aspx
Posted by: shoestring | July 1, 2006 3:49 PM