What are the FTC Bizopp Rules?

The Federal Trade Commission Business Opportunity Rules, also known as the FTC Bizopp Rules or simply The Rule, are a set of regulations established by the FTC in the United States to protect consumers from fraudulent or deceptive business opportunities. According to these rules, potential purchasers should have all of the information they need in order to meaningfully assess the risks of buying business opportunities. These business opportunities, including work-at-home opportunities, are typically identified by advertisements such as “Be Your Own Boss” or “100% Return on Your Investment.”

Key Takeaways

• The Federal Trade Commission Business Opportunity Rules, also known as the FTC Bizopp Rules or simply The Rule, are a set of regulations that protect potential consumers from fraudulent or deceptive business opportunities.
• The FTC Business Opportunity (Bizopp) Rules were enacted on March 17, 2012. 
• These rules ensure that individuals who are considering investing in or purchasing a business opportunity receive accurate and transparent information.

Essential Elements of the FTC Bizopp Rules

The FTC's Business Opportunity Rules are instrumental in protecting consumers from deceitful business practices and promoting transparency in the market. Key aspects of the FTC Bizopp Rules include:

• Disclosure Requirements: Sellers must provide detailed written disclosures about their company, management, costs, refund policies, and legal history at least 7 days before requesting any payment from the potential buyer. Moreover, The FTC requires sellers to reveal if the company or important staff members have faced any civil or criminal cases over the past ten years involving false claims, fraud, violating securities laws, or any unfair or deceitful practices, including breaking any FTC regulation.
• References: Sellers must provide contact information for at least 10 prior purchasers in the area, or all prior purchasers if less than 10. This allows buyers to get in touch with references. Similarly, sellers must state to potential consumers that “If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers.”
• Earnings Claims Substantiation: Any earning claims made by the seller must be backed up with written proof that the claims are true. This includes claims made in person, on promotional materials, on websites, through social media, or anywhere else. Misleading earnings claims are strictly prohibited by law.
• Misrepresentations: Sellers cannot make false or misleading claims about the business opportunity, including about success rates, potential sales or profits. 
• Cancellation and Refund Policies: Sellers must clearly state the terms of their cancellation and refund policies in the disclosure document. Buyers have a "cooling-off" period during which they can cancel and receive a refund.
• Civil Penalties: The FTC can impose civil penalties on individuals or businesses who violate the Business Opportunity Rules. This can include imposing civil monetary penalties and seeking injunctive relief. In certain cases of serious or repeat violations, criminal prosecution may be possible.

Bottom Line

Following these regulations is not only wise, but strictly required by law. If you are starting a new business opportunity or want to ensure you are fully compliant, our legal professionals at Attorney At Law can help. Contact our team today to discuss how we can help launch your business opportunity safely, efficiently and with full regulatory compliance.