DSSRC Administrative Closure #339
The Direct Selling Self-Regulatory Council (DSSRC) initiated an inquiry into certain social media posts disseminated on behalf of a direct selling company that markets health and fitness products. The inquiry focused on one health and safety claim and nine earnings claims, including financial freedom claims, a full-time income claim, a "quit my job" claim, and one atypical earnings claim. The social media posts appeared on Facebook, Instagram and YouTube.
In responding to the inquiry, the Company stated that it takes its responsibility to train, educate, monitor and regulate its brand partners very seriously, and acts swiftly with a blind eye to rank or position, when violations are discovered. It informed DSSRC that it has established a culture that promotes honest and straightforward marketing of both the opportunity provided by the Company, as well as scientifically backed and supported marketing of the benefits that customers can expect from its products.
The Company employs two full-time lawyers who oversee its compliance operations and provide its field with extensive compliance training for each brand partner regarding the Company Policies & Procedures, Federal Trade Commission guidance, as well as the myriad of case law precedent and dicta available. The Company noted that since 2108 it has worked with an internet monitoring vendor with particular expertise in the direct selling channel to assist with the monitoring of its sales force members. The Company maintained that its compliance team closely monitors the data provided by the monitoring vendor and immediately addresses all violations to ensure corrective action is taken as soon as possible and retraining is performed as necessary. Lastly, the Company stated that it also trains and encourages its brand partners to police one another to promote a culture of compliant behavior.
Regarding the claims at issue in the DSSRC inquiry, the Company was successful in removing eight of the nine earnings claims and the one health and safety claim. Regarding the one social media post that included an earnings claim which remains publicly accessible, the Company stated that the salesforce member attempted to remove the post, but the platform would not allow her to modify or delete the post. As a result, the Company attempted to contact the platform request that the post be removed and placed a comment on the post to make clear to consumers that the post is not compliant.
DSSRC appreciated the Company’s voluntary, good faith actions to address its concerns and determined that the Company efforts were necessary and appropriate. Pursuant to the DSSRC Guidance on Earnings Claims for the Direct Selling Industry (“the DSSRC Guidance”), DSSRC cautions direct selling companies and their independent salesforce members against the use of any words or images communicating that a direct selling business opportunity will result in earnings beyond what can be generally expected by the typical salesforce member in the depicted circumstances. Moreover, section 6(c) of the DSSRC Guidance, notes that “… some words and phrases are prohibited when made to a general audience of prospective or current salesforce members. Such words and phrases include statements such as ‘quit your job,’ ‘be set for life,’ ‘make more money than you ever have imagined or thought possible,’ ‘unlimited income,’ ‘full-time income,’ ‘replacement income,’ ‘career-level income,’ or any substantially similar statements or representations.” Moreover, the DSSRC Guidance also states that some words and phrases carry a particularly high risk of being misleading to consumers when communicated in a general context. Such words and phrases include but are not limited to "financial freedom" and "time freedom."
DSSRC also appreciated the Company’s effort to address the health and safety claim at issue. As noted in the FTC’s 2022 Health Products Compliance Guidance, in addition to conveying product claims clearly and accurately, marketers need to ensure that there is adequate support for their claims. Under FTC law, advertisers must have a reasonable basis for their product claims before disseminating an ad. The FTC’s substantiation standard is a rigorous one, particularly when claims relate to health. When applied to claims about the efficacy or safety of health-related products, the FTC’s rigorous substantiation standard is one of “competent and reliable scientific evidence.” The FTC has more specifically defined that standard as “tests, analyses, research, or studies that (1) have been conducted and evaluated in an objective manner by experts in the relevant disease, condition, or function to which the representation relates; and (2) are generally accepted in the profession to yield accurate and reliable results.
Based upon the Company’s expeditious actions to address DSSRC’s concerns, the inquiry was administratively closed.
(Administrative Closure #339, closed on 11/14/24)
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