FTC Revises New Business Opportunity Rule

Exempts Multilevel Marketing Companes!

March 18th, 2008The Federal Trade Commission announced today that the New Business Opportunity Rule that was proposed in April of 2006 has been significantly revised.

According to the FTC notice, "The Business Opportunity Rule would still cover those schemes currently covered by the interim Business Opportunity Rule, and it would expand coverage to include work-at-home schemes." Most significant to our businesses, the FTC goes on to say,"the revised proposal, however, would not reach multilevel marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal."

Within the revised new rule it goes on to streamline the required discloser information by "eliminating requirements to disclose the number of cancellations and refund requests that a business opportunity seller receives or the litigation history of sales personnel." View the FTC notice here:

http://www.ftc.gov/opa/2008/03/busrule.shtm

Commentary:

A number of individuals and associations within our industry claimed, or endorsed those who claimed, that the FTC proposed this new rule for the deliberate and specific purpose of destroying the network marketing industry. What's more, it was being "fast tracked" to expedite our industry's demise, or at the very least to garner significant federal revenue from the fines that would ultimately be levied on network marketing companies.

Chicken Little appears to have been wrong. I'm only hedging slightly because I haven't read the entire text of the 114 page revised version of the rule yet. I expect to find at least a few little gotcha's (or still-can-getcha's) in there somewhere. But at least based on the notice posted by the FTC today is seems to be a complete victory for the network marketing industry. And as it should be. If you haven't been following this issue, check out Gerald Nehra's article "FTC: What Were You Thinking?" to get an idea of how misguided the original version of the rule was.

Here was my take on it at the time:

http://www.marketwaveinc.com/articles/alert62.pdf There may still be more revisions, and perhaps surprises, but for now it looks like the sky is going to be staying right up there where it is.

Len ClementsMarketWave, Inc.