The Federal Trade Commission’s recently-amended Business Opportunity Rule (the “BOR”), which imposes new disclosure requirements and a waiting period on business opportunity products, or “bizopps,” goes into effect March 1, 2012.  Under the BOR, bizopp sellers are required to provide potential customers with a written disclosure statement containing the following information:

-          Key information about the seller, including a list of any legal actions the seller –including any affiliated person or company—has been involved in;

-          Evidence supporting any earnings claims made about the bizopp;

-          The material terms of any cancellation or refund policy; and

-          A list of all other customers who purchased the bizopp within the last three years.

Two copies of disclosure statement must be provided to the customer at least seven days before the purchase.  The consumer is required to return a signed copy of the statement to the seller and retain another for the consumer’s own records.

Although the new requirements are clearly aimed to reduce the prevalence of bizopp fraud, they will undoubtedly increase the operating expenses and record-keeping responsibilities for vendors of legitimate business opportunities.  In an effort to mitigate this burden, the FTC has included several exceptions in the BOR that serve to exclude several types of bizopps from having to comply with the new requirements.

Kronenberger Rosenfeld regularly provides preventative counseling on FTC and related compliance matters, as well as FTC litigation defense.  If you need to determine whether your business opportunity offer complies with the FTC’s new regulations, you contact us through our website or at 415-955-1155, ext. 120.

Judge Robert L. Hinkle of the Northern District of Florida denied Plaintiff Ned Newcomer’s motion for class certification.  Kronenberger Rosenfeld represented Defendant 1021018 Alberta, Ltd. doing business as Just Think Media (“JTM”) in this action.  Kronenberger Rosenfeld opposed class certification on several grounds, including that Newcomer’s claims were not typical of the class.

Newcomer brought a complaint seeking class certification against JTM, alleging that he purchased a product from JTM based on misleading disclosures on JTM’s website.  Newcomer filed a motion seeking to certify a nationwide class of all consumers of JTM’s product.  JTM opposed the motion, arguing that Newcomer did not satisfy the prerequisites under Federal Rule of Civil Procedure 23.  The Court ruled in JTM’s favor.

Specifically, Judge Hinkle denied Newcomer’s motion for class certification based on his failure to prove any of the four requisite elements at issue: numerosity, typicality, predominance of common questions, or superiority.  Among other holdings, the Court specifically sided with JTM in its argument that pricing disclosures at the top of its webpage, which Newcomer does not remember reviewing, prevented a finding that Newcomer’s claims were typical of the class or that common questions predominated.  Accordingly, class certification was denied, and a putative class action that initially sought millions of dollars in alleged damages was reduced to a worth of less than $100.     

Newcomer v. Integraclick Inc, et al, Case No. 4:10-cv-00477-RH-WCS.

Click here for a copy of Judge Hinkle’s decision.

Kronenberger Rosenfeld, LLP continues to fight for the rights of millions of bank customers with the recent filing of a consolidated class action complaint against Zions Bancorporation and Zions First National Bank. (more…)