Both a new Earnings Claim Rule and proposed amendments to the Business Opportunity Rule are out for public comment, according to the FTC. The FTC notes that while false income claims are currently prohibited by the FTC Act, the suggested adjustments. would provide the FTC the authority to pursue severe remedies against covered businesses that make false statements, such as consumer refunds and civil fines.

In accordance with the current Business Opportunity Rule (BOR),

In order to ensure that potential buyers have the information they need to weigh the risks of purchasing a work-at-home program or any other business opportunity, business opportunity sellers [are required] to provide specific information to help them evaluate a business opportunity. Notably, MLM organizations are excluded from the BOR, which was implemented in March 2012. With the suggested modifications, this will continue to be the case. The rule would now “cover money-making opportunities, such as business coaching and investment opportunities,” according to the FTC’s proposed BOR amendments. The MLM sector is especially targeted by the recently proposed Earnings Claim Rule. The FTC plans to implement a new Earnings Claim Rule in addition to the modifications to the Business Opportunity Rule. According to the FTC, the Earnings Claim Rule would specifically prohibit multilevel marketing organizations from:

making false earnings claims; making earnings claims without supporting evidence (or a reasonable basis); misrepresenting the opportunity to join an MLM as a job opportunity; and making any unsupported or misleading claims to keep customers from taking advantage of accurate earnings information.

Although multilevel marketing organizations are now excluded, the FTC is looking for feedback on this exception. According to the proposed changes, multilevel marketing would not be considered a money-making opportunity. Should there be any changes made to this proposed exemption? If not, why not, and how? Give every piece of evidence that backs up your response. If you suggest any modifications, including the suggested rule wording. The following are some of my opinions about MLM regulation:

The MLM sector is not significantly impacted by the planned BOR reforms. The “money-making opportunities” that are being targeted are not MLM. Although this is a positive step for customers, nothing has changed in the context of the multilevel marketing sector. Although I applaud the new Earnings Claim Rule, I do wonder why the FTC did not just suggest extending BOR to the multilevel marketing sector. The only explanation that comes to mind is that the FTC is unsure that such a proposal will be approved, which is why they are creating a whole new regulation. Although I don’t really agree with it, active regulation would triumph if it effectively applies the BOR to multilevel marketing organizations, even if it does so in a roundabout manner. The Earnings Claim Rule further strengthens the FTC’s power to recover ill-gotten earnings from dishonest actors, which benefits consumers.

This was a rather simple procedure until lately. Assets were confiscated, money was frozen, and the FTC sued for a TRO and injunction. Payday loan fraudsters prevailed in a Supreme Court dispute against the FTC in 2021. Although the legal basis for the decision may have been sound, consumers have paid billions of dollars in the end. Restoring the status quo would be aided by the FTC having a fresh, unambiguous framework to target financial advantages. That effectively regulates trade and non-investment multilevel marketing businesses. The SEC and/or CFTC would continue to have authority over them. The public has sixty days starting on January 13th to comment on the new Earnings Claim Rule or the proposed BOR modifications. Please take note that there is no set timeframe for what will happen after the public comment period has ended. After reviewing the public comments, the FTC will take further action.