By: SSN Staff
On Jan. 31, The Direct Selling Association (DSA) filed public comments on the Federal Trade Commission’s Advanced Notice of Proposed Rulemaking (ANPR) on the Business Opportunity Rule (BOR). The ANPR was released in November 2022, at which time the Commission asked the public to comment on the broadening of the rule and also on the effectiveness of the current BOR.
Established in 2012, the BOR sets guidelines for those selling a business opportunity to ensure that potential buyers receive the information required to make an informed decision. The rule prohibits sellers from making deceptive claims about the opportunity and mandates key disclosures to be provided via a disclosure document, including identifying information about the seller, information and substantiation of the seller’s earnings claims, documentation of any legal actions against the seller, the cancellation and refund policy, and a list of purchasers from the previous three years.
The disclosure document must be provided to the prospective buyer seven days before a contract is signed, and would, according to the DSA, “impose undue burdens on direct sellers.”
In the 11-page letter, the DSA urged the Commission to finalize its ongoing earnings claims rulemaking before updating the BOR. The Association also reminded the FTC that the Direct Selling Self-Regulatory Council (DSSRC) was created after the current BOR was finalized, and that this self-regulation provides for even more consumer protections that the Commission seeks to establish through the seven-day waiting period.
While direct sellers are not exempted from the current BOR, the FTC chose not to categorically include sellers of network marketing opportunities within the scope of the final rule after
it received over 17,000 public comments in 2011—the overwhelming majority of which urged the Commission not to include legitimate direct selling companies in the rule.
The DSA’s public comment, signed by Association President Joseph N. Mariano, urged the Commission to not broadly cover direct sellers if the rule is expanded.
“DSA hopes the FTC keeps the scope of the BOR narrowly tailored to not broadly cover direct sellers,” the comment letter states. “Rather than revisiting placing burdensome requirements on businesses that have been previously considered, the Commission should refer to its prior discussions on and defer to its previous decisions on this issue.”
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