If compensation is based on the customers actions then I would think it will be a problem.

If however, you over deliver in your offering and follow-up and then encourage word of mouth, after you have built a relationship with your clients, then it should work.

The idea of a cash distribution could work on the first round but after that people would know it is coming and that could affect their actions, which puts things right back where the FTC feels there is a problem.

This is not a cut and dry issue and it does require more thought and fresh ideas.

Thanks again for your insightful feedback Jac.

Sam Knoll

90 days after the sale award the customer a cash distribution. The customer then creates buzz about the product that not only providing benefits but also the award, all after the fact. No hyping. No distributors. No earnings. No mention of business. No mention of an Opportunity…. Yet the customer is now excited about telling others about the product and the companies customer awards…

Would that work under this FTC?

Thank you for sharing that article.

Outstanding food for thought.

One of my greatest concerns (I know I am not alone) is how sweeping changes like this can be. It is all too easy for legislation to take place that requires further interpretation in its implimentation. That is generally where things can run amock as the whole thing becomes very hazy.

Thanks again Jac

Vitaman,

Your comment is also right on.

Frankly, if more people controled their interactions with the world around them via the “Golden Rule” we would all be in much better shape.

Than you.

Sam

Vitaman

By Jonathan W. Emord – On Sept. 15, 2006, Congressman Ron Paul sent the Government Accountability Office (GAO) a letter requesting that the GAO investigate the Federal Trade Commission?s (FTC?s) business opportunity rule [at the request of Network Marketing Business Journal (NMBJ)]. In particular, Congressman Paul asked the GAO to determine if the FTC had a sound empirical basis for its conclusion that fraud is widespread in the business opportunity marketplace.

He also asked the GAO to determine if the FTC underestimated the number of people who would be subject to the rule and the economic impact of the rule. A fair inquiry should yield answers that confirm that the FTC has no sound empirical basis for its widespread fraud conclusion and that it has grossly underestimated the number of people subject to the rule and the cost of the rule. Few realize this, but Congressman Ron Paul?s letter is a brilliant Trojan horse that could bring down the business opportunity rule.

ALSO:
But you may not be aware that this proposed rule is so broad that its very burdensome requirements would even apply to those who simply sell books or other publications concerning business opportunities, or who otherwise provide education or advice to those who want to start a new business.

It?s not much of an exaggeration to say that the author of a cookbook (or teacher of a cooking class) might be subject to the proposed rule because his or her readers (or students) could use what they learn to open a new restaurant or start a catering business. So if you sell publications or offer educational or coaching services, you should be very, very afraid of this FTC proposal.

MORE:
In its present form, the FTC?s proposed regulation would be devastating, if not fatal, to the direct sales industry. The stated objective of the proposed FTC regulation is to help the FTC prevent and regulate against fraud and deceptive practices. Of course NMBJ and the industry associations also champion that endeavor. However, the FTC already has all of the legislation and regulations required to accomplish that. In fact, the FTC cannot keep up with known or suspected violators now. Perhaps, the FTC hopes this regulation will provide a tool that allows them to close down suspected perpetrators of fraud or deceptive practices without having to prove their cases. This is wrong. It violates the constitutional philosophy and the right of a fair trial. We have a right to conduct commerce under the U.S. Constitution. I believe the proposed regulation will impede that right. It will have the effect of closing legitimate businesses without due course. The proposed regulation, as written, uses a nuclear bomb to kill a mosquito. In essence, the proposed regulation will greatly harm the society that the FTC is claiming to protect.

The agency that is trying to pass such damaging regulation, the FTC, is also the agency that has worked so hard in creating the do-not-call list and other regulations to protect our privacy. However, the FTC?s proposed regulation completely ignores such concerns. In fact, it creates ?do-call? lists and forces people to be on them if they desire to earn income.
Find that article http://www.NMBJ.com.

The DSA believed that the FTC author of the proposed regulation came from the FTC?s franchise department and did not understand direct sales.
Although it is obviously true, there are a few problems with this scenario. First, the FTC knew his background and expertise when they assigned him. Second, the proposal committee had the DSA?s input and still published the proposal as is. Most troubling, government agencies tend not to want to admit that they are wrong. They felt the requirement of having a prospect provided full disclosure of every lawsuit, whether civil or criminal, with substance or frivolous, won, lost or dropped, lodged against or from the company, its owners, its executives or the representative during the last 10 years would only generate about 35,000 pieces of paper. This full disclosure would have to include full income disclosures. The disclosure would also have to include a list with name and phone numbers of the nearest 10 representatives to the prospect?s home address from the past three years, whether those 10 representatives are active or not. The prospect would have to sign a receipt of that disclosure and wait seven days to join. For a minute, forget how impossible it would be to administer such a ridiculous and overbearing requirement. So, why does the FTC want this overbearing and devastating regulation? It will provide a means for the FTC to easily fine and levy technicalities against a company without having to find or prove any real wrongdoing. The motive of the FTC proposed regulation to give the FTC a means to extensively and legally extort money from more companies and distributors. The proposed regulation if it does pass substantially as now written. Distributors will probably sign everyone up initially as preferred customers for seven days and then allow them to submit their recruits. There may be some predating or postdating of applications and disclosures. This will make the stated objectives of the FTC futile. In fact, the scam artists will not comply and the legitimate companies will be put out of business. And most prospects probably won?t read or understand the disclosures anyway.
However, it will not lower the damage to direct selling significantly. The added administration and logistics burden will be horrendous. The amount of paper work will tear down many forests. Storage and administration costs will bankrupt most companies and deter entrepreneurship in the United States. Privacy rights will be ignored and trampled. The distributor list is one of the most valuable proprietary assets of any direct sales company. Under this regulation, companies will be forced to divulge who their distributors are by geographic location, 10 distributors at a time. If you want to know whom the people local in direct sales are, just go to your local competitors and ask for a disclosure statement. How many people would be reluctant to join a direct sales opportunity if they knew they are opening themselves up to such harassments?
Remember, direct sales opportunities do not usually require investments of tens or hundreds of thousands of dollars such as franchises or vending distributorships. They usually only require a sales kit for under $100. The rest of the purchases are for personal consumption and the company usually fulfills customer orders for the distributor. The burden and damage of the proposed FTC regulation is simply not justified. This is especially true when you consider the stated objectives are probably going to be bypassed, making them futile. The only outcome will probably be to initially line the FTC budgets and then devastate the direct sales and other opportunity income industries along with the economy.

If flat out deception is used in this process then neither the promoter, prospect nor the merchant benefits in the long run.

That said, there is a lot of “grey area” around what pages, articles, reviews, ads etc. require disclosure and furthermore what exactly constitutes an ad, review etc. It seems, as can often be the case, that there could be a lot related to this opinion that would be open for pretty liberal interpretation.

That is ONE of the worrisome aspects.

Thanks for you comments Scott