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FTC Proposed Business Opportunity Rule:
DRA Speaks Out

Jeffrey Babener, Babener and Associates

© 2006

The DRA, Distributor Rights Association, has urged members of the MLM, Direct Sales, Direct Selling, Network Marketing and Party Plan industry to oppose an initiative of the FTC in its draft of the FTC Proposed Business Opportunity Rule. The DRA, www.mlm-dra.org, is an industry trade organization that speaks out for the rights of distributors, supports the industry and provides a forum for education and policy issues.

In April 2006, the FTC released a sweeping proposed change in its FTC Business Opportunity Rule. The proposal was immediately and strongly criticized by representatives of and experts in the MLM, Direct Sales, Direct Selling, Network Marketing and Party Plan industry. The process to a completed Rule is expected to last 18 months to 3 years.. For extensive analysis, text of the actual FTC Proposed Business Opportunity Rule and ongoing updates, please visit www.mlmlegal.com.

DRA Position Statement on FTC Proposed Business Opportunity Rule

DRA founder and chairperson, Rod Cook of www.mlmwatchdog.com, and Cheryl Gonzales, President of the DRA, www.mlm-dra.org, at respective websites, urged members to weigh in with the FTC on the issue. Support was urged to address the tremendous hardship that would fall upon an industry with approximately 14 million earners in the U.S. alone. Below is the actual text of the "call to action" statement issued by the DRA on the FTC Proposed Business Opportunity Rule.

DRA Call to Action Statement:

DRA - HELP! 911! Time Extended to 16 July Get your Letter in by 10 July. Get your family and friends in on the action!

YOUR REPLY TO STOP FTC FROM DESTROYING YOUR MLM BUSINESS

This is a 911 letter you HAVE to write to the Federal Trade Commission (FTC) expressing your discontent with the new FTC proposed Business Opportunity Rule. Your letter absolutely critical, the FTC has to hear your comments as members of the American public. If we don't succeed in this our entire industry will be changed for the worse and crooks will still run free!

If adopted, this rule could have a devastating impact on our industry, requiring direct selling companies to drastically alter their sales methods and placing additional burdens on MLMer's like you in order to comply with the new Federal rules.

Written comments to the FTC must be received on or before July 10, 2006.

The attached SAMPLE [Associate/Distributor/Consultant] letter, can be used as a guide. Personalized letters written from the heart will have a much greater impact than mass-produced "form" letters.

Your letter needs to cover the following areas:

Personal Story

  • Years selling products
  • How selling products contributes to family finances
  • How selling products has developed you as person (confidence, public skills, etc.)

$Dollars to sign up = Disclosure

  • Crooks that currently violate the rule which is at $500 will not be hampered by $0 dollar limit.
  • How the FTC justify more paper pushers to catch the crooks!

Disclosure Form itself

  • Will generate tons of paper that legitimate small home businesses will have to deal with.
  • Environmental issues of just all the trees killed during global warming
  • In a period of large Federal deficits it will add more "paper pushers" in Washington.

Disclosure form signing then a Seven-Day Waiting Period

  • Casts MLM in a negative light which is unfair
  • Record keeping and administrative problems for your small business
  • Causes unnecessary delays for good people

Litigation Reporting

  • Does not distinguish between Civil and Criminal cases to general public
  • Unfair that it does not distinguish between winning and losing lawsuits

Requirement for 10 References in an area.

  • Can be used as a deceitful tool by Scam Artists
  • Impractical there may not be 10 people in a small town or county
  • Privacy issues due to ID theft and safety does the FTC plan to set up a liability fund to reimburse harmed distributors. May are women and this could make them vulnerable to rape and other crimes of passion.

The FTC's Goals are noble, But

  • There are millions of good prospects in the U.S. but how about more enforcement of laws on the books to stop Crooks from stealing them from good hardworking MLM Distributors?
  • The FTC's proposed rule would unfairly target legitimate direct selling businesses.
God Bless you for taking the time to save our industry.

MLM DISTRIBUTOR SAMPLE LETTER

Take what you want. We would appreciate it if you would please draft your letter in your own words. Please DON'T use curse words!

Your name
Business name, if available
Street address
City, State Zip
Phone number, optional
Email address, optional

A LETTER HAS MORE IMPACT [USE THIS address to mail your comments. The FTC requires TWO copies of your letter If you send them in.] Mail by July 8th because of Washington, D.C. post office scanning for Anthrax germs (delays letters)

Alternate: FILE USING Web link: https://secure.commentworks.com/ftc-bizopNPR/
Federal Trade Commission/Office of the Secretary, Room H-135 (Annex W)
Re: Business Opportunity Rule, R511993
600 Pennsylvania Avenue, NW
Washington, DC 20580
RE: Business Opportunity Rule, R511993.

Dear Sir or Madam:

I am writing this letter because I am concerned about the proposed Business Opportunity Rule R511993. I believe that in its presented form, it could prevent me from continuing as a (an) [ Associate OR Consultant OR Distributor - what name your company uses] and destroy my small business.

[Tell your personal story in your own words] I have been an independent Contractor [ Associate OR Consultant OR Distributor - what name your company uses] for more than ___ years.

[Suggestion] Originally, I started my Network Marketing because of the products I loved them and wanted to earn some additional money. Now my family depends on this extra income to supplement our budget. Please don't destroy my small business we need it!

[Suggestion] Some of the sections in the proposed rule would make it hard or almost impossible for me to sell my [optional your company's name] products (and - or services).

This waiting period will give the public the idea that there's something wrong with me or our plan and also reflects badly on me. I also think this seven-day waiting period is unnecessary, because [Your Company's Name] already has a 90% buyback policy for all products including sales kits purchased by a salesperson.

[Say what you want about the seven-day waiting period] One of the most difficult sections of the proposed rule is the seven day waiting period to enroll a new [Associate OR Consultant OR Distributor - what name your company uses.].

[Your COMPANY'S name] sales kit only costs $____. People buy TVs, cars, and other items that cost much more than that and they don't have to wait seven-days. Under this waiting period requirement, I will need to keep very detailed records when I first speak to someone a prospect and will then have to send in reports to my company. I am a small home business and this burden hurt or destroy my business. This proposed rule is bad.

Finally, the proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. I am glad to provide references, but in this day of identity theft, I am very uncomfortable giving out the personal information of individuals (without their approval) to strangers. Women in my organization may be subject to sexual or racial harassment so this part can't go in at all, unless the FTC passes an addition to this rule Prohibiting sexual or racial attacks related to this disclosure. In the end the rule must bind the FTC to take direct enforcement action on sexual and racial attacks with a special unit assigned to monitor actions related to the disclosure forms.

[Conclusion] I have seen many scams on the Internet and been approached by many crooks because of my success. This rule will do nothing to stop them. They hurt my business! This rule will not stop Crooks - they violate the current rule all the time. But I am a good American citizen and it will hurt me. Thank you and please help me.

Sincerely,
[Your signature]
[Your name]

### End of DRA Call to Action Statement ###

Please click here to download and read the complete text in PDF format of the FTC Proposed Business Opportunity Rule

Look for ongoing updates on the status of the FTC Proposed Business Opportunity Rule at MLMLegal.com Copyright Jeffrey Babener Jeffrey Babener

On any given day you can catch Jeffrey Babener, editor of www.mlmlegal.com, lecturing on Network Marketing at the University of Texas or the University of Illinois, addressing thousands of distributors in Los Angeles, Bangkok, Tokyo and Russia, or writing a new book on Network Marketing, an article for Entrepreneur Magazine or a chapter for a University textbook. Over two decades he has served as marketing and legal advisor to some of the world's largest direct selling companies, the likes of Avon, Nikken, Shaklee, Tupperware, Prepaid Legal, Longaberger, Melaleuca, Discovery Toys, Usana, Amazon Herb, NuSkin, Cell Tech, Sunrider…. and he has provided counsel to the most successful telecom network marketing companies...Excel, ACN, World Connect, ITI, Acceris, AOL Select and Network 2000. An active spokesperson for the industry, he has assisted in new legislation and served on the Lawyer's Council, Government Relations Committee and Internet Task Force of the Direct Selling Association (DSA) as well as serving as General Counsel for the Multilevel Marketing International Association. He is an MLM attorney supplier member of the DSA and has served as legal counsel and MLM consultant on MLM law issues for many DSA companies. He is author of multiple books, including, Network Marketing: What You Should Know, Network Marketer's Guide To Success, Tax Guide for MLM/Direct Sellers, Starting and Running the Successful MLM Company, The MLM Corporate Handbook and Window of Opportunity. He is author of countless articles on network marketing, many of which can be found at www.mlmlegal.com where he is the editor. You will see his articles and interviews in such publications as Money, Atlantic Monthly, Success, Entrepreneur, Business Startups, Home Office Computing, Inc., Money Makers Monthly, etc. He has been chairman of numerous industry conference series, including, Starting and Running the Successful MLM Company, The MLM Entrepreneur Series and The MLM Masters series. He has served as the close advisor to scores of MLM Companies and their distributors, comprising millions of distributors and billions of dollars in sales. Mr. Babener is a graduate of the University of Southern California Law School, where he served as editor of the USC Law Review. After an appointment to be an advisor law clerk to a U.S. Federal Judge, he went on to become a member of the California and Oregon State Bar, where he has also served as chairman of the Oregon State Bar Committee on Judicial Administration. He has exclusively practiced in the area of direct selling for over 20 years. A Regulatory Update for MLM,Direct Selling, Network Marketing, Direct Sales, Party Plan Independent Distributors and Companies

Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
Jeffrey A. Babener, the principal attorney in the Portland, Oregon law firm of Babener & Associates, represents many of the leading direct selling companies in the United States and abroad.

www.mlmlegal.com

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