Why the FTC Business Opportunity Rule will fail - the evidence from Overture
Over the last 30 years, the FTC has been trying to protect consumers from buying, investing, or purchasing business opportunities scams or fraud. Their main regulatory tool has been the Franchise Rule, which ironically works because the business opportunities scammers don't prepare a disclosure document as they and the public don't believe that their distributorship is a franchises. Even if they did register, they would find that the Franchise Rule makes demands of them in terms of disclosure that are very hard to satisfy. A satisfying catch 22.
The FTC has also tried to educate the public about buying business opportunities. But as the various FTC Business Opportunities Sweeps show consumers continue to lose hundreds of millions of dollars in these scams.
Has the rise of the internet made any difference to or increased the conumer's due diligence?
Well, consider these two pages from overture:
- The number of times in June, 2006 the keyword "business opportunities" was searched on - 180,247.
- The number of times in June, 2006, the keyword "business opportunities due diligence" was searched on - 0. Hmm, I detect a pattern here.
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