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FTC Extends Rebuttal Period

From the FTC Press Release:

Commission extension of public rebuttal comment period: The Commission has approved the extension of the public rebuttal comment period related to the Revised Notice of Proposed Rulemaking (RNPR) in connection with the Business Opportunity Rule. In the notice, the FTC announces that rebuttal comments submitted in response to the proposed rule must now be submitted by July 1, 2008 - 15 days later than the original expiration date of June 16, 2008.

On March 18, 2008 the FTC announced the publication of a Federal Register notice seeking comments on a revised proposal for a new trade regulation rule governing business opportunities.

Since 1978, the FTC historically has had a single rule covering two distinct types of offerings: franchises and business opportunity ventures.

Many of the very familiar national fast-food restaurants and hotels are franchises; business opportunity ventures include vending machine routes, rack display operations, and medical billing schemes.

These ventures, unlike franchises, typically do not involve the right to use a trademark or other commercial symbol. Nevertheless, they do call for the opportunity seller to provide purchasers with locations for machines, or with accounts, or clients, and have been covered by the Franchise Rule.

In April 2006, the Commission proposed a separate Business Opportunity Rule that would cover just business opportunity ventures. Part of the proposal was to expand coverage to business arrangements that were not formerly covered by the Franchise Rule and to streamline disclosure obligations. (Business opportunities formerly covered by the Franchise Rule remain covered under an interim Business Opportunity Rule.)

After evaluating the comments received on the April 2006 notice, the Commission issued a RNPR that is more narrowly focused than the April 2006 proposal.

As proposed now, the Business Opportunity Rule would still cover those schemes currently covered by the interim Business Opportunity Rule, and it would expand coverage to include work-at-home schemes.

The revised proposal, however, would not reach multi-level marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal.

The revised proposed rule also streamlines the requirement to disclose material information by eliminating requirements to disclose the number of cancellations and refund requests that a business opportunity seller receives or the litigation history of sales personnel.

The initial comment period expired on May 27, 2008, while the rebuttal comment period was set to expire on June 16, 2008.

I am going to predict that the networking companies will eventually come to see the value of opting in to the FTC's Business Opportunity Rule: it prevents federal class actions because there is no private cause of action for the new Rule.

A pointless exercise in regulation which will allow the FTC to trumpet meaningless judgments that returned no money.

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Full post as published by Misleading Advertising Law on June 13, 2008 (boomark / email).