DSSRC Administrative Closure #138
The Direct Selling Self-Regulatory Council (“DSSRC”) contacted a direct selling company (the “Company”) regarding two Facebook posts disseminated by salesforce members. DSSRC was concerned that one of the posts conveyed claims that the Company’s products can protect against disease including express claims stating that the salesforce member is “COVID free” and the products being a “pandemic response.” DSSRC was similarly concerned that the other post contained implied claims of unsubstantiated product, health and wellness benefits including claims that the Company’s products can protect against disease and COVID-19.
The Company contacted the salesforce members that had disseminated the Facebook posts in question and was able to have the salesforce members remove the claims. In addition, the Company informed DSSRC that, in an effort to discourage and remove as many non-compliant product claims as possible, it implemented a number of steps to improve its training of its salesforce members.
The Company noted that its Policies and Procedures, with which every salesforce member agrees to comply, prohibit the making of illegal health claims and require salesforce members to have any promotional materials approved by the Company before being disseminated. The Company further noted that last year as the pandemic emerged it sent an email to all of its salesforce members reminding them of the prohibition against illegal health claims, especially those related to the global pandemic. The Company also informed DSSRC that it developed a new training program for distributors and office staff to remind them of the rules about product claims and offer guidance on appropriate marketing of the Company’s products. The Company stated that it also increased its monitoring of social media posts disseminated by its salesforce members.
During the pendency of the inquiry, DSSRC also became aware of certain video testimonials featured on the Company’s website; specifically, a section of the website that featured top level distributors. DSSRC expressed its concern that these testimonials may reasonably communicate claims of career level income and “luxury lifestyle” depictions such as large homes, luxury cars, etc. DSSRC noted that luxury lifestyle depictions such as these are likely to invite regulatory scrutiny. In its 2018 Business Guidance Concerning Multi-Level Marketing (https://www.ftc.gov/tips-advice/business-center/guidance/business-guidance-concerning-multi-level-marketing), the Federal Trade Commission (FTC) stated: “Some business opportunities may present themselves as a way for participants to get rich or lead a wealthy lifestyle. They may make such representations through words or through images such as expensive houses, luxury automobiles, and exotic vacations. If participants generally do not achieve such results, these representations likely would be false or misleading to current or prospective participants.”
In an effort to illustrate how DSSRC generally evaluates testimonials and earnings claims DSSRC called the Company’s attention to the DSSRC Guidance on Earnings Claims for the Direct Selling Industry (available here: https://bbbnp-bbbp-stf-use1-01.s3.amazonaws.com/docs/default-source/dssrc/dssrc_guidanceonearningsclaimsforthedirectsellingindustry_2020.pdf?sfvrsn=4ecfcd36_6)
In response to the dialogue between the Company and DSSRC, the Company removed the testimonials by its top earning distributors from the Company’s website.
As a result of the Company’s actions to address DSSRC’s concerns, DSSRC administratively closed this inquiry.
(closed on 2/18/2021)