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luvtravel
Member
Joined: 11 Dec 2006
Posts: 800
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# Posted: 25 Jun 2007 08:21
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The Federal Trade Commission, as reported in these pages recently, is in the process of promulgating a new rule regulating MLMs, or "business opportunities" that will help sort the legitimate players from those preying on credulous consumers.
The proposed rule would eliminate the $500 minimum investment requirement as the threshold for when a "business opportunity" comes under the regulations of the FTC Franchise Rule.
Thus, the $495 card mill might become a thing of the past.
The proposed rule would also require a one-page disclosure addressing five items:
� Whether or not sellers of business opportunities make earnings claims;
� A list of any criminal or civil legal actions against the seller or its representatives that involve fraud, misrepresentations, securities, or deceptive or unfair trade practices;
� Whether the seller has cancellation or refund policies and the terms of such policies;
� The total number of purchasers in the past two years;
� The number of those purchasers seeking a refund or to cancel in that time period;
� And a list of references.
We think the proposal to end the $500 franchise fee as the threshold to come under FTC rules will go a long way to ending card mills and MLMs capitalizing on consumers' desires for discounted travel.
And the requirement that MLMs disclose the number of purchasers seeking refunds or cancellations could be an effective way to counter MLM schemes that line the pockets of their owners through takes from membership fees rather than from earning higher commissions by growing travel sales.
MLMs can be a legitimate way to attract new blood to the retail travel industry and foster growth if they are serious about travel sales and are not designed as a get rich now scheme for their principals and their cronies. The proposed FTC rule on "business opportunities" would help.
FTC is trying to stop the "Card Mills" like the YTB,Traverus,Intelletravel companies.
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ateamfuntimer
Joined: 22 May 2007
Posts: 669
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# Posted: 25 Jun 2007 10:27
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By any chance do you have link to all the proposed changes or can I just look it up on the FTC site. Thanks in advance.
Adam
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jnapier
Member
Joined: 30 Aug 2005
Posts: 647
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# Posted: 25 Jun 2007 11:22
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I don't believe the card mills are the target of the new regulations. It would effect ANYONE who markets a business opportunity. It's been kicked around for over a year and I don't see it making it into law as there are just too many companies with VERY BIG pockets who are fighting against it.
As a former franchise owner I know what a franchise agreement looks like...Picture a Dallas Phone Book....and then imagine you are supposed to read it.
I doubt it will make it into law.
Jay NaPier
Home Business Coach
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goldmills
Member
Joined: 3 Apr 2007
Posts: 184
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# Posted: 26 Jun 2007 01:27
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It's a good thing Coastal is a Travel Membership Club and not a business opportunity.
Jeff
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