FTC Goes After Network Marketing Industry

On April 12, 2006, the Federal Trade Commission proposed a new rule that will make it unlawful for any person who presents a business opportunity to do so without making specific affirmative disclosures on a federal form to every prospect seven days before the consummation of a deal. The failure to make the required disclosures is itself a deceptive advertising practice under the proposed rule. The practice is deceptive even if the underlying business transaction is legitimate.

Click below to listen to Jonathan Emord's speech at the MLMIA's 22nd Annual Convention & Expo in La Jolla, CA in April, right after the FTC's announcement. His entire talk is about 70 minutes long but a great summary of the effects of the proposed ruling.

Summary Of FTC Ruling

I have my opinions of what this all means....or may mean to you and I. But I'll let my friend Tony Rush's words make my point for me.

"I think the 7-day waiting period is silly.....but I have no problem with most of what they're proposing. In fact, disclosures such as what they're asking for will do a lot to clean the riff-raff out of the industry and make things much more transparent.

If I had to guess, I'd say that the 7-day requirement and the "10 previous customers" requirement will get thrown out at some point. When you consider that the waiting periods for buying a house or buying a gun aren't that strict....it seems silly to tell a lady that she has to wait 7 days before she can sign up in Avon.

And I think the "10 previous customers" thing will probably get tossed because of privacy laws. In this day and age, I think the FTC is going to be hard-pressed to get people to willingly hand out 10 names and phone numbers to a complete stranger just because someone is considering getting involved in a business.

But, other than that, I say the disclosures are a good thing."

Now what do YOU think?

Weigh in and leave your feelings as a comment.