The FTC rule

[Shakespearegirl]

apparently they've decided NOT to include MLMs in their business opportunity rule. Makes me sick.

http://www.ftc.gov/os/2008/03/R511993business.pdf

[buck09]

apparently they've decided NOT to include MLMs in their business opportunity rule. Makes me sick.

http://www.ftc.gov/os/2008/03/R511993business.pdf

Very unfortunate. That's a long ruling - assuming you've read through it, what's the FTC's rationale for not including them in the disclosure requirements?

[wserra]

what's the FTC's rationale for not including them in the disclosure requirements?

I'm sure you will be shocked to find out that such a "rationale" doesn't really exist. Here is what passes for a "rationale"

The second problem with the breadth of the IPBOR’s coverage relates to the Commission’s attempt to reach pyramid schemes with the Business Opportunity Rule. An overwhelming majority of commenters argued that the IPBOR failed to differentiate 48 between unlawful pyramid schemes and legitimate companies using an MLM business model. These commenters argued that the requirements of the IPBOR simultaneously would have been insufficient to curb pyramid fraud yet devastating to MLM companies 49 and individual MLM distributors. Criticism was not confined to industry comments. Two consumer groups also filed comments asserting that, although MLMs should be covered, the disclosures the Commission proposed in the IPBOR would be inadequate to remedy deceptive earnings claims. On balance, based upon this record and its law 50 enforcement experience, the Commission does not believe it is practicable or sufficiently beneficial to consumers to attempt to apply the proposals advanced in this rulemaking against multi-level marketing companies, particularly when considering the burdens upon industry. The Commission, therefore, has determined that at this point, it will continue to use Section 5 to challenge unfair and deceptive acts or practices in the MLM industry.

48 Of the more than 17,000 comments that the Commission received, it is fair to estimate that well over 95% came from members of the MLM industry expressing opposition to the IPBOR. As noted above, many of these were form letters.

And we all know how diligent and effective the FTC has been against blatant pyramid ripoffs using Section 5. What do they average - one unknown per year?

Allow me to translate from bureauspeak: We're the Bush administration. The foxes guard the henhouses. Industry doesn't like it - well, that's good enough for us.