This page was last updated on: November 14, 2012

The FTC has poured on the heat in its efforts to stop these scams through law enforcement actions! These Business Opportunity scams often involve selling consumers bogus promises of a job, government grant or some other money-making opportunity. Some make false claims that they can modify homeowners’ mortgages or rescue them from going bankrupt!  Editors Note:  TELEMARKETING WITH AUTO DIALERS WAS HIT HARD – WARNING TO MLMers WHO ARE USING THEM!



Business Opportunity Watchdog consumer protection information on registration

Business Opportunity,  definitions, requirements for registration

The 26 states that require Business Opportunity Registration

Rod Cook the Biz Opp Expert Says,
This hearing on June 1, 2009 went well for you. The FTC decided that the FTC Business Opportunity Rules will not apply directly to MLM companies. Network Marketing companies will be regulated as they were previously. However, remember that 23 states still require Business Opportunity registration and use of disclosures if the amount is over $500 (South Dakota $200).  Also, see recent case below in California on Biz Opp upheld.   Ur Editor: Rod Cook apologizes for the delay in posting this.  I have been running from one side of the world to another.  I will give details in a few weeks.

28 May 2009 PROTECTING YOU:  ROD v.s. FTC!
Rod Cook, YOUR Editor: Next week (1 June) I have to appear at an FTC hearing on Business Opportunity Law and the ill effects on MLM. I am appering in behalf of the Distributor Rights Association to protect MLM distributors from the bad elements the FTC has proposed.  Here is what I am focused on making sure does not get into the Biz Opp rules:

1.  Seven days before a prospect signs up and pays money they will have to sign your MLM company disclosure document.  Your company will have to spend money to store these written pieces of paper.  So get our your old fax machines or... expect to have a big FedEx bill sending these disclosures around.

2.  Want to wait 7 days?  That is what the FTC wants you to do!  You will have to wait seven days after the prospect signs the disclosure form to sign them up and get their money to your company.

3.  The FTC is saying the Biz Opp disclosure form will only be one page!  Fat chance, by next year it will be 2 pages and probably be 10 pages in 10 years.

4.  They want more people to handle the paperwork.  Oh great, a bigger government!  Where is Ronald Reagan??

5.   Will it stop scamsters?  No!  See below!

6.   In the draft rule the FTC quotes their so called attack on pyramid schemes. They use their takedown of 2Extreme as an example.  Yes they did take down 2Extreme,  two years too late, and after your WatchDog had helped people that had been scammed out of $30K send complaints to their AG's and the FTC.  This was over 20 older people taken for over $30k@ .... Two years later the FTC moved!  They also quote Equinox who was hitting people for at least $5000.  The FTC limit was $500 and it took them years to do anything.  In fact, it was when we (the MLM Watchdog), got Equinox on ABC's 20/20 that the FTC was forced to get off their buns and do something about shutting Equinox down.

7.  The Federal regulation is dropped to zero dollars from $500 to have the disclosures in #1 signed.


Ed. Note:  This is Interesting! Both a District Attorney and the California AG collected money on this business opportunity “Hit.” As state revenues decline, expect more activity by State AG’s and local District Attorney’s to use  Business Opportunity law to bring in money for state and local governments.

California Appeals Court Rejects Challenge to
Business Opportunity Plan Law
California’s state law requiring disclosure requirements on small business opportunity offerings is not unconstitutionally vague, California’s Court of Appeal upheld recently on January 21st, 2009.

The court uUpheld an injunction prohibiting two sellers of home-based Internet business startup plans from selling products or services without first complying with the Seller Assisted Marketing Plan (Business Opportunity laws in 22 other states) Act. The Court  ruled that language describing representations that purchasers can earn more than they invest gave adequate notice of the conduct triggering the requirements.

iMergent, Inc., and its subsidiary, StoresOnline, Inc., were self-described providers of “eCommerce” technology, training, and other web-based programs that purport to help start, operate, and maintain home-based businesses.

Sales Presentations
Before their money was seized and doors closed, the defendants marketed their services and products by conducting sales presentations at hotels and conference centers throughout the United States, and consumers were suckered by by mail with offers of free gifts and meals to attend an initial 90-minute presentation. The suckers who attended were invited to pay $20 to attend what defendants characterized as “a full-day Internet marketing training workshop” valued at $1,889.

However, Ventura County District Attorney Gregory D. Totten brought suit alleging the “workshop” was actually “a vigorous all-day sales pitch for [defendants’] Internet storefronts, website design and Internet marketing services.”

Pointing to testimonials on the defendants’ website by customers who claimed to have recouped their investments, and similar representations at sales presentations, Totten claimed the defendants had violated the SAMP (Business Opportunity laws in 22 other states) Act by failing to make certain disclosures mandated from sellers who require an initial payment between $500 and $50,000, and represent that a purchaser “will earn, is likely to earn, or can earn an amount in excess of the initial payment paid by the purchaser for participation.”

Unsophisticated Buyers
The legislature passed the act in 1978 (following the FTC action in 1975 establishing Business Opportunity Registration and disclosure) in order to assist inexperienced or unsophisticated buyers in making an informed decision prior to investing in a business opportunity, and it requires seller assisted marketing plans (Business Opportunity laws in 22 other states) to register with the Attorney General’s office, provide significant disclosure statements to potential buyers prior to signing any contracts, and provide the buyer specific contractual rights after a purchase has been made.

iMergent and its subsidiary stipulated to a judgment requiring them to pay $1.2 million in restitution and refrain from violating the act’s disclosure requirements, but  later the California Attorney General sought a second injunction from the Ventura Superior Court, alleging iMergent had failed to comply with the stipulation.

The defendants contended on appeal that the act was void for vagueness, but Justice Steven Z. Perren flatly rejected their argument and affirmed the injunction.

“In a prior action, defendants stipulated to a final judgment in which they agreed to comply with the SAMP (Business Opportunity laws in 22 other states) Act,” he wrote. “They will not now be heard to complain of a preliminary injunction which, in meaning and effect, is virtually identical to their earlier agreement.

Justice Perren went on to say,“Defendants assert that the SAMP Act’s phrase “will earn, is likely to earn, or can earn” is vague. Their position brings to mind the response of Senator Sam Ervin, Jr., during the Watergate Hearings of 1973.

Justice Perren quoted: “When asked how he was sure of the meaning of certain words, Ervin replied, ‘Because I can understand the English language. It’s my mother tongue.’ We can do no better. We believe that ‘affirmed’ has equal clarity.”

Presiding Justice Arthur Gilbert and Justice Paul H. Coffee joined Perren in his opinion.
The case is People v. iMergent, Inc., B201302.

FTC Publishes Final Guides Governing
Endorsements, Testimonials

Changes Affect Testimonial Advertisements, Bloggers, Celebrity Endorsements

Editor’s Opinion Note: If we did not have enough trouble now with rules and regulations, the FTC dumped this on MLM and Internet marketing.   Why?   Your competitors (or enemies) can tattle-tale on you!   See tattle-tale links below!  Also, the link to the complete new rule is below. 

ASAP: Send this whole page to your company.  And yes, the Distributor Rights Association sent a protest about competitors and enemies falsely attacking good MLM Companies!



The Federal Trade Commission today announced that it has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.

The notice incorporates several changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The Guides were last updated in 1980.

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. SOME HELP! In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.
The Commission vote approving issuance of the Federal Register notice detailing the changes was 4-0. The notice will be published in the Federal Register shortly, and is available now on the FTC’s Web site as a link to this press release. Copies also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaints the FTC’s online TATTLE-TALE (your Editor’s annotation) Complaint Assistant  Or call TATTLE-TALE (your Editor’s annotation) 1-877-FTC-HELP (1-877-382-4357).

Then the FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad.

The FTC’s Web site also provides free information on a variety of consumer topics.


Federal Register Notice 1 Dec 2009 implementation

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