DSSRC Administrative Closure #223
The Direct Selling Self-Regulatory Council (“DSSRC”) contacted a direct selling company (“Company”) regarding seventeen social media posts disseminated on Facebook and one YouTube video. These social media posts were identified by DSSRC through its monitoring of the direct selling industry. The Facebook posts included references to the ability of Company salesforce members to earn significant monthly income and achieve “financial freedom” through the Company’s business opportunity.
In response, the Company informed DSSRC that it had contacted all of the salesforce members responsible for the dissemination of the posts at issue and was able to effectuate immediate discontinuance of all but four posts. DSSRC found the actions taken by the Company to be necessary and appropriate. The Company noted that three of the remaining posts were made by inactive salesforce members whose accounts had been terminated prior to receiving DSSRC’s Notice of Inquiry and that, notwithstanding the Company’s enforcement actions, it had attempted to contact the salesforce members to have the posts removed.
The remaining earnings claim at issue was communicated in a YouTube video. The Company maintained that the representation that the Company provides many other benefits “besides earning income” was not a substantive statement regarding an expectation of specific earnings that could be generally expected by a Company salesforce member. The Company contended that, when viewed in the context presented, the salesforce member references other aspects of the opportunity such as being mentored by the Company management team and being part of a community of women with similar core values as being the reason for joining the Company. The Company also noted that the net impression left by the salesforce member’s remark is that the best reasons for joining the Company are for reasons other than the financial benefits.
As DSSRC noted in section 9 of its Earnings Claim Guidance for the Direct Selling Industry, when evaluating express and implied messages from an earnings claim, DSSRC will review the totality of the claim including its words, images, and context in order to determine the “net impression” or the takeaway message conveyed to the audience. The relevant audience to consider is that of a reasonable consumer when the claim is made to a general audience, such as by posting the claim on public social media or the internet.
Upon reexamination of the claim in the YouTube video, DSSRC agreed with the Company that, in the context of how the claim was presented, the salesforce member did not convey a representation of income that Company salesforce members could expect to receive from participating in the Company’s business opportunity. Notwithstanding this determination, the Company voluntarily removed the video.
Additionally, the Company explained to DSSRC that it has taken several measures to proactively assist Company salesforce members from communicating inappropriate earnings claims. The Company has retained a third-party monitoring company to detect any improper earnings claim. The Company is also in the process of preparing an income disclosure statement that will be posted on its website for purposes of transparency. Finally, the Company informed DSSRC that it is undertaking a comprehensive training program that will be provided on a weekly basis and will be conducted by an attorney with an extensive background in direct selling.
Based upon the good faith efforts demonstrated by the Company to address DSSRC’s self-regulatory concerns DSSRC administratively closed this inquiry.
(Administrative Closure #223, closed on March 3, 2022)
© 2022 BBB National Programs