This report documents how the DSA (Direct Selling Association) lobby helped the MLM (multi-level marketing) industry gain an exemption from the FTC’s (Federal Trade Commission’s) Business Opportunity Rule, leaving consumers unprotected from the most unfair and deceptive of business practices, proving the need for a firewall between regulators and those they regulate – and for public officials with the skill, the will, and the resources to stand up to powerful special interests.
Download and read this important document (link below), which gives the sordid history of the growing influence of the DSA/MLM lobby over the FTC.  Below are just a few of the “smoking guns” revealed in this report:
  • The DSA’s 336-page  shotgun blast of arguments defending the MLM industry against the arguments of critics and the original rationale for the Proposed Business Opportunity Rule in 2006
  • The evolution of a revolving door of top officials from the FTC to the ranks of DSA/MLM lobbyists
  • A massive volley of 17,000 questionable submissions by MLM participants objecting to the Rule overwhelmed and overimpressed FTC staff. Over 5,000 of these were generic form letters, others were submitted at the urging of the MLM company, and some were submitted by the upline or company in their name. In spite of the large number of pro-MLM submissions, it was less than 1/10 of 1% of those to whom the appeal went out from MLM executives for comments. Conversely, 100% of experts advocating for consumers favored the Rule – but these were given short shrift by FTC staff handling the Rule.
  • Lois Greisman, who led the BOR rulemaking by FTC staff, obtained the comments by former FTC Chairman-turned-lobbyist Timothy Muris, objecting to applying the Rule to “direct selling.” She was his assistant while he was Chairman. His arguments are full of deception, but the Revised Rule announced in 2008 reflected his arguments.
  • The DSA boasted to its members that its $4 million lobbying campaign had paid off, with the FTC giving MLM companies exemption from having to comply with the Rule.
  • FTC officials engaged in ex parte communications with DSA officials and members at a DSA income-generating seminar event – to which those advocating for consumers were not invited.
  • FTC officials ignored research of widespread fraud in the MLM industry presented in comments by consumer advocates.
Click here to download the full 220-page report (pdf file)

Additional valuable insights and history of how the FTC has come to legalize business opportunity fraud under the influence of the DSA/MLM lobby can be obtained by reading the report by Robert FitzPatrick of Pyramid Scheme Alert titled: “The Main Street Bubble – a Whistleblower’s Guide to Business Opportunity Fraud. How the FTC ignored and Now Protects It.” Go to www.pyramidschemealert.org

2 Comments on “REGULATORY CAPTURE: The FTC’s Flawed Business Opportunity Rule”

  1. Sherril Johnson

    This was maybe my first clue to the fact that our government is falling apart. I don’t remember when I first read it, probably around 2011 -12. After my last (as in FINAL) brush with an MLM, Ava Anderson Non Toxic personal care products. AANT changed their name and continues selling something in the MLM way to this day, I believe. Back to the point, government failing. Oh, yes. No too long after that I observed that the FDA is no longer able to protect people from the dangers of drugs that maim and murder. Looking on the brighter side, it will all be OK. No matter what happens it will be OK… for someone.

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