FTC seeks feedback on possible changes to Business Opportunity Rule

Federal Issues Agency Rule-Making & Guidance FTC Business Opportunity Rule Deceptive

On November 17, the FTC announced it is soliciting public comments on possible modifications to the Business Opportunity Rule. According to the FTC’s advance notice of proposed rulemaking (ANPR), the Commission is seeking feedback on the rule’s effectiveness, whether it is necessary, and whether it should be expanded to cover other types of money-making opportunities, such as coaching or mentoring programs, e-commerce opportunities, or investment opportunities. The Business Opportunity Rule prohibits the use of deceptive statements when selling business opportunities, and requires sellers to make several key disclosures to potential buyers, including: (i) the seller’s identifying information; (ii) information supporting claims about possible earnings or profits; (iii) disclosures about whether the seller, its affiliates, or key personnel have been included in certain legal actions; (iv) information on whether the seller has a cancellation or refund policy and any applicable policy terms; and (v) a list covering the past three years of consumers who have purchased the business opportunity. The FTC will also require sellers who conduct business in languages other than English to provide disclosures in the language in which the sale is conducted.

The ANPR also asks commenters to address whether business opportunity practices “disproportionately target or affect certain communities or groups, including but not limited to people living in lower-income communities, communities of color, or other historically underserved communities,” and requests feedback on suggested amendments to address any negative effects. Comments on the ANPR are due 60 days after publication in the Federal Register.