Network Marketing Death Knell? Dwayne Armstrong
http://www.CanuckHomeBiz.comThe U.S. Federal Trade Commission (FTC) has proposed new legislation that would, according to some, protect consumers from fraudulent network marketing business schemes, but according to the network marketing industry leaders might sound the death knell of legitimate multi level marketing businesses.
The proposed legislation, about which the FTC will take consumer comments until mid July 2006, is being called Business Opportunity Rule R511993.
This proposed law that targets network marketing business would create new definitions for the terms business assistance, earnings claims, and business opportunity, broadening the language so that it includes a lot of common business practices that don't now fall under the business opportunity category. It would require that a network marketing business representative provide a detailed and factual statement of disclosure a minimum of seven days before any prospect contracts with or pays the network marketing business provider.
The legislation would also require that the network marketing business disclose in the statement any prior lawsuits, the statistics on prior contractors that had cancelled their contracts with the business within two years of signing, and a reference list. The latter would be those who purchased or contracted with the network marketing business in the prior three years.
An additional require in this business opportunity legislation is disclosure to prospective purchasers of a statement of earnings claims that would have extensive information on earnings, with frequent updates.
Network marketing executives and association representatives believe that the business opportunity legislation would negatively affect the entire industry and require multi level marketing first to change their sales methods to comply.
The claim of these network marketing managers is that the requirements would be burdensome and oppressive for the firms and the distributors and that buying cars, large appliances and even assault weapons or hand guns would be more easily accomplished than becoming a network marketing business distributor.
These MLM executives are beseeching distributors and other interested parties to write to the FTC and express their dismay with this proposed business opportunity legislation. They are convinced that passage of the bill would set off unnecessary alarms about the legitimacy of network marketing businesses and the way they compensate their distributors. They state that the proposed legislated procedures would be a violation of distributor privacy, would be time consuming and would lead to the loss of interest on the part of enthusiastic prospects. The claim of these network marketing business leaders is that this FTC legislation would increase considerably the costs of doing business for not only the multi level marketing businesses themselves but the distributors as well.
Source:
http://youngliving.us/html/ftc_R511993.html
http://www.mydswa.org/FTC.asp#item_1
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