Sergio Pareja on FTC Regulation of Pyramid Marketing Schemes

Sergio Pareja of New Mexico has written Sales Gone Wild: Will the FTC's Business Opportunity Rule Put an End to Pyramid Marketing Schemes? 39 McGeorge Law Review.  Here's the abstract:

This article analyzes the anticipated effect of the FTC's Business Opportunity Rule on pyramid marketing schemes. Pyramid marketing schemes consistently rank in the top ten lists of consumer complaints received by the FTC and state consumer protection divisions, victimizing 1.5 million Americans a year. One recent class action settlement demonstrated that the victims, who are often relatively poor and uneducated, had an average loss of approximately $8,000 each. The FTC has promulgated a new Business Opportunity Rule in an effort to end these abuses. Promotors of business opportunities will be required to comply with the new rule beginning on July 1, 2008. This article carefully analyzes the rule and concludes that it will not be effective at stopping these schemes. The article suggests several key changes to the rule and recommends congressional legislation to stop the abuses.

Comments

[michael webster]

This looks to be a very interesting article.

In my experience,the biggest problem in this area is with the victim's image.

After the con, it is impossible for the person to relate objectively how they were taken in by nonsense.

As such, they treated by the regulators as mere marks who deserved what they got.

[michael webster]

I have now read the entire paper, and I am disappointed. The FTC has already stated the scope of the new biz op rules will not encompass mlm companies.