The FTC's Proposed Business Opportunities Rule Part II
First, he describes giving a lecture at a business opportunity trade show explaining how individuals could get material information from the local state authorities which regulate business opportunities. He states "some opportunities are only opportunities for con artists to rip you off." One audience member was very attentive and asked Whitlock a number of questions. After his talk, Whitlock donned a disguises and started hawking a franchise for Platinum 1000 - a light bulb that never burns out. Whitlock collected $14,000 in a few hours and that attentive member for the audience? Buyer..
The second story may surprise readers. Whitlock attended a seminar which was promoting an illegal pyramid scheme promoted by a company called "Gold Corp". A Linda Chapman was presenting this wonderful opportunity and Whitlock was appalled by how many people were falling for the pitch, since it was an obvious pyramid. (Whitlock had done some previous research on the company prior to attending the seminar.) Whitlock jumped to his feet and exposed the scam. The crowd went wild - but, they were angry with Whitlock! He had stolen the fig leaf off this fraud, but everyone desperaedly needed to believe that this was "the one for them". As Cialdini eloquently explained in his book, for these individuals the disclosure of true and material facts just made them act irrationally quicker!
What do these two examples show about the FTC's proposed Business Opportunities Rule?
Like the Franchise Rule, the Business Opportunity Rule is " posited on the notion that a fully informed consumer can determine whether a particular offering is in his or her best interest."
Whatever sense this might make for the purchase of a franchise, since most business opportunities are frauds or scams it makes no sense to predicate the rule on "informing consumers". More information, apparently sanctioned by the FTC, will in fact produce more fraud and not less.
It is this psychological fact that the FTC is not paying sufficient attention to in their drive to obtain wider jurisdiction over frauds.