DSSRC Administrative Closure #228
The Direct Selling Self-Regulatory Council (DSSRC) initiated an inquiry into a direct selling company (“Company”) regarding earnings claims disseminated by salesforce members of the Company on social media. The social media posts at issue included claims that salesforce members could earn full-time income, and/or substantial amounts of money in a short time, obtain financial freedom, and be their own boss. DSSRC expressed its concern to the Company that such social media posts may be reasonably interpreted as communicating that Company salesforce members would earn a substantial income through participation in the Company’s business opportunity. DSSRC also expressed its concern to the Company that the posts conveyed atypical earnings claims regarding the amount of income that could be generally expected by the typical salesforce member.
The Company promptly responded to DSSRC’s inquiry. The Company informed DSSRC that it was able to identify six individuals that were responsible for disseminating certain of the social media posts identified by DSSRC and that it was unable to determine the identity of the individuals responsible for two of the social media posts. With respect to the six individuals the Company was able to identify, the Company informed DSSRC that it suspended the accounts of those individuals but that only one of them was an active distributor. The Company also contacted the individuals to request that the social media posts be removed. In each instance, the subject social media post was removed or, if the individual was not responsive to the Company’s request, that individual’s account was terminated by the Company. In accordance with DSSRC’s recommendation, the Company also contacted the social media platform to request that the posts at issue be removed.
Additionally, the Company also informed DSSRC of steps it has implemented to improve its training and oversight of its salesforce members with respect to claim dissemination including company-wide compliance webinars and bootcamps as well as increased emphasis on the importance of compliance in all company trainings and events. The Company also informed DSSRC that its compliance team has increased its monitoring of social media platforms to ensure that posts made by its salesforce members comply with Company policies. The Company further noted that it hired a new full-time compliance officer and is in the process of hiring additional personnel that will support its compliance efforts. The Company also informed DSSRC that it created a compliance training that will be required for all new members in order to become distributors and that the Company has instituted new training regarding claim dissemination for its top salesforce members.
Based on the foregoing, DSSRC administratively closed the inquiry and will continue to actively monitor the claims being disseminated by the Company and its salesforce members.
(Administrative Closure #228, closed on March 30, 2022)
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