MLMs Need to be Included in FTC’s Business Opportunity Rule
TINA.org files comment in support of applying rule to direct selling industry.
FTC Business Opportunity Rule Comment
In January 2023, TINA.org submitted a comment to the FTC, which was seeking public comments regarding the Commission’s Business Opportunity Rule (“BOR”) and whether it should be extended to include business opportunities and other money-making opportunity programs not currently covered by the Rule.
In its comment, TINA.org focused on the need to include the direct selling industry, and MLM companies in particular, in the BOR. Among other things, TINA.org highlighted the informational asymmetry that exists between MLM companies and recruits, as well as the near-universal use of deceptive earnings claims in the direct selling industry. TINA.org also discussed the need for MLMs to provide accurate earnings data to potential recruits, arguing that the harms caused by misleading recruitment tactics, including false and misleading income disclosure statements, is pervasive and significant. TINA.org further addressed the injuries suffered by distributors that are lured into MLMs as a result of misinformation and high pressure recruitment tactics, explained the inadequacies of targeted law enforcement actions, and discussed why direct selling self-regulation is not a viable substitute for the BOR. Finally, TINA.org argued that the purported poor fit of the BOR does not justify exempting MLMs from disclosure provisions and other requirements of the BOR and ultimately urged the FTC to extend the BOR to include MLMs.
Click here to read TINA.org’s full comment.
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