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Phil's Past Episodes Episode 12: FTC Proposes New Business Opportunities Rule The FTC has been busy. They've been working a lot of hours busting down the doors of the scammers taking away our hard earned dollars. While part of me says, "Good job!", there's another part of me that says, "Work smarter, not harder, those are MY tax dollars you're spending!" Our Friends at the Federal Trade Commission have been listening. They've been doing some homework. I think they've been reading my blog. I wouldn't be surprised if they subsribe to my MLMEruption.com Newsletter, either. So what's going on? The Federal Trade Commission, the FTC, has announced that it's outlining new laws to protect consumers from Get Rich Quick and Work From Home opportunities, and some new laws to prevent people from creating these same opportunities. Of course, the law only targets those companies who you wouldn't want to be in business with anyhow. Those companies created around breakage. Those companies who make more money when you don't hit your goals and when you leave them. For real online businesses, those who I would personally do business with, there is a downsizing of the compliance costs. Most online businesses built on breakage require an initial investment below $500. $499, in some cases, but it's always below $500. Why? Because the current FTC rule applies to business that charge $500 or more for an initial investment. The new law simply eliminates that hard deck figure. It would mean ALL start up business would be subject to the law. The new rules would also require that a one page disclosure document would be created. This page would have to address 5 key issues. 1. Earning Claims - (additional Earning Claims Statement with proof) Now when you see the infamous words, "Make $900 a day without doing anything!", they'll have to back it up with REAL proof. 2. Criminal Backgrounds (includeing marketing fraud) Although a lot of this information is public record, this rule will require that the principles in the company be honest with you. Sure, we're not all perfect, and a brush with the law doesn't mean that the company is not one I would business with... but more importantly, the fact that this information is present up front is a good thing. However, I don't think it will prohibit a company from not declaring someone as a principal. There are several companies operating today with key figures in their offices who've done jail time for fraud. For some companies, this is EXACTLY what they're looking for. After all, if a person got busted for fraud, surely they learned their lesson right? Of course, that lesson they learned was "how I got busted, and what not to do this time around to stay out of jail". 3. Cancellation and Refund Policies In a general statement, if this is NOT listed, you can almost be certain that it's a 100% refund deal. However, there is time and energy in getting your money back. And that time and energy is something you can NEVER get a refund on. This disclouse up front will be a great thing for the consumer. 4. Number of purchasers (and those seeking refunds or cancellations) I think that out of all of the new rules, THIS is the key. THIS RULE will expose companies based on breakage. You will be able to see how many people signed up, and how many people left. I would like to see this admended to include a "WHY They Left" statement. When you see more people leaving than staying, you can rest assured that this is NOT a company to get involved with. 5. A list of references. I think this is perhaps the weakest rule change of them all. References? Please. The majority of the people associated with Mob Bosses will tell you how great they are for the community. The new rules would also list unfair or deceptive practices - ones a lot of MLMs use today - this will certainly cause a lof of commotion in the MLM community. If any of the businesses you are personally involved in start making changes over the next few months, there's a good reason why. They've read the rules, and they want to continue making money. I am not suggesting that just because the business you are in makes changes that it is a scam -- not at all -- changes for compliancy don't always mean that what the company was doing was illegal -- it just means that they weren't adhering to the law. The Commission is open to comments on the proposed new business opportunities rule up until June 16 and for rebuttal comments until July 7. FTC, Office of the Secretary Room H-135 600 Pennsylvania Avenue, NW Washington, D.C. 20580. The FTC requested that any comment filed in paper form be sent by courier or overnight service because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. For MLMEruption.com, This is Phil Foster - The Trusted Voice of MLM |
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