Operation Income Illusion: A Positive Step by the FTC to Curb Deceptive Income Claims

Dec 23, 2020 by BBB National Programs

The Federal Trade Commission (FTC)’s December 14 Operation Income Illusion initiative is a crackdown by the FTC and 19 federal, state, and local law enforcement partners against the operators of work-from-home and employment scams, pyramid schemes, investment scams, bogus coaching courses, and other nefarious operations that purport to offer significant income opportunities but that end up costing consumers thousands of dollars.

In this effort, the FTC and its partners are opening new law enforcement actions that focus on scams targeting consumers with fake promises of income and financial independence that have no basis. 

The Direct Selling Self-Regulatory Council (DSSRC) has long cautioned direct selling companies about the dissemination of business opportunity claims that communicate unrealistic earnings claims. One of the greatest challenges for direct selling companies is ensuring that the earnings claims communicated by their salesforce members comply with legal and self-regulatory standards.

In fact, earlier this year the DSSRC published its Earnings Claims Guidance for the Direct Selling Industry, which was intended to reinforce the fundamental principles of advertising claim dissemination with a particular emphasis on earnings claims communicated in social media posts. 

In general, direct selling companies are encouraged to refrain from communicating any claims that can be construed as communicating that consumers and potential salesforce members can generally expect to earn anything beyond modest or supplemental income from the direct selling business opportunity. Since the release of this guidance, companies have been very receptive and the announcement by the FTC of Operation Income Illusion is consistent with this ongoing effort to ensure that income claims in the direct selling industry are communicated truthfully and accurately.

DSSRC remains concerned about the continued proliferation of exaggerated income claims and will continue to monitor the advertising messages of the direct selling industry to make sure they adhere to appropriate and ethical advertising standards. 

If you think you have found a false business opportunity claim in the direct selling industry, file a challenge with the DSSRC. 

Suggested Articles

Blog

Old MacDonald Had an Engagement Farm: Lessons Learned from FTC v. NGL

Capturing user engagement is the foundation of internet commerce. And while the incentives to prompt greater engagement are certainly understandable, the recent NGL Labs case from the FTC raises important questions about the ethical and legal ramifications when companies try to artificially generate engagement among their userbase.
Read more
Blog

Independence Day Edition: CBPR Framework Offers “Checks & Balances”

Going, Going, Gone Global, a webinar on the CBPR Global Forum, delved into how privacy impacts businesses’ brand reputation and builds trust with key stakeholders, discussed the purpose of the Global CBPR, and its value to Global Forum members.
Read more
Blog

Industry Self-Regulation: Part of the Solution for Governing Generative AI

The spotlight on generative AI remains bright. The benefits and risks continue to be ever-present in the minds of business and political leaders. No matter the timing or the setting, the creation of transparency, accountability, and collaboration among stakeholders is key to successful industry self-regulation as is the importance of setting standards and best practices.
Read more
Blog

The Demise of “Chevron Deference”: Who Will Fill the Regulatory Gaps?

The Supreme Court's 1984 ruling in Chevron v. NRDC held that courts should defer to federal agencies’ interpretations of ambiguous federal laws so long as those interpretations are reasonable. So given the court’s decision to overturn it, where does that leave companies that want a level playing field and perhaps even to raise the bar, instead of racing to the bottom?
Read more