Newsletter
REGULATIONS GOVERNING MULTI-LEVEL SALES REVISED
The Fair Trade Commission (FTC) recently issued revisions to the Regulations Governing Multi-level Sales which took effect on 1 July 1999. The key contents of the revisions are as follows:
Reporting requirements are strengthened so that multi-level sales enterprises must report to the FTC 30 days prior to commencing or terminating operations.
When a participant joins a multi-level sales enterprise, the enterprise must inform the participant of the enterprise's total business turnover for the previous year, the rights and obligations the participant has upon withdrawal from the enterprise, and the method of calculating the value of returned merchandise.
Starting on 1 June 2000, participants of more than one year and earn a commission, bonus or other economic benefit in the prior year may request to examine the certified financial statements of the enterprise for the previous year. The enterprise should not refuse such a request without a proper reason.
Multi-level sales enterprises must treat as contract violations and take firm action against participants engaged in improper sales behavior. Such behavior includes cheating or misleading persons in the promotion or sale of products or recruiting of new participants, or raising funds from others under the pretense of making sales.