Case #171-2024: Monitoring Inquiry – MONAT Global Corp

BBB NATIONAL PROGRAMS

Direct Selling Self-Regulatory Council
Case #171-2024: Monitoring Inquiry – MONAT Global Corp

Company Description

MONAT Global Corp (“MONAT” or the “Company”) is a direct selling company that sells haircare, skincare, and wellness products. The Company is headquartered in Doral, Florida and was founded in 2014.

Basis of Inquiry

The Direct Selling Self-Regulatory Council (“DSSRC”) is a national advertising self-regulation program administered by BBB National Programs. This inquiry was commenced by DSSRC pursuant to its ongoing independent monitoring of product and income claims in the direct selling industry and to further explore the findings of an evaluation of the Company’s income claims previously conducted by a non-governmental organization (“NGO”).¹

This inquiry included 25 earnings claims, including claims related to Company incentive rewards. DSSRC was concerned that the representative claims below communicated the message that Company salesforce members can generally expect to earn significant income from the MONAT business opportunity. The claims were disseminated on Facebook, Twitter, Instagram, YouTube, and on the Company website.

The representative claims identified by DSSRC in this inquiry were as follows:

• Promotion of 2023 incentive trips to Italy and France²
• Promotion of MONAT’s Motor Club³
• “Whether you’re looking to build a second revenue stream or a full-time business”
• “Being able to earn a car payment or a bigger car that will hold our whole entire family””
• “I earned 7 trips and drive the car”
• “… replaced my previous salary”
• “Today, I received a deposit that put me over one million dollars in commissions.”
• “… she’s made over a million dollars in commissions, has paid off her debt and is saving for her family’s future. I’ve quit my full-time job and am doing MONAT.”
• “… seeing my sister become a millionaire by building other self-esteem has always been inspiring, but seeing her build her DREAM HOME for her family and stepping foot on the frame that we are going to make so many memories in with our babies was my stepping stone to what I can create for my family.”
• Depiction of $10,000 check accompanying statement that “This check is one of the many bonuses I’ve achieved, presented to me on one of the 8 amazing trips (hello Bahamas!) I’ve earned.”
• “… paying for your tuition is only a fraction of the good MONAT has done and will continue to do.”

Company Position

In responding to DSSRC’s Notice of Inquiry, MONAT stated that it is committed to upholding the highest standards of transparency and accuracy in all its business practices. The Company did not attempt to substantiate the claims that were the subject of this inquiry. Instead, the Company stated that it took action to remove a number of claims and modified several others.

To assist DSSRC in tracking its efforts to reconcile the concerns in this inquiry, the Company provided DSSRC with a detailed spreadsheet listing its actions.

MONAT effectuated the removal of nine claims that were brought to its attention and attempted to modify a number of the remaining posts by either including a disclosure and link to the Company’s income disclosure statement (IDS) to existing posts or moving already-existing disclosures to a location that is in closer proximity to the triggering claim.

Analysis

DSSRC appreciated MONAT’s good faith efforts to address its concerns. Although the Company, in the spirit of voluntary self-regulation, took a number of remedial actions to modify and discontinue several of the claims at issue, DSSRC recommended that MONAT take several additional steps in an effort to clearly and accurately reflect the earnings opportunity that it offers to consumers and potential salesforce members.

The MONAT Website

MONAT initially indicated that the posts relating to Company incentive trips were compliant and that the statements and images pertaining to those incentive trips are not considered to be earnings representations. DSSRC did not agree. As stated in section 2(F) of DSSRC’s Earnings Claims Guidance for the Direct Selling Industry, “For purposes of a DSSRC inquiry, an earnings claim is any claim, express or implied, communicated by either the direct selling company itself or by its independent salesforce members that conveys that salesforce members may earn or have earned company-sponsored incentives, including those lifestyle purchases described in section 2(B), and vacations or other rewards.”⁴ Moreover, according to section 15 of the Federal Trade Commission’s (FTC) Business Guidance Concerning Multi-Level Marketing, “Some MLMs and MLM participants may present the MLM as a way for participants to get rich or lead a wealthy lifestyle. They may convey such representations through words or through images such as houses, automobiles, and luxury vacations. These are implied earnings claims, and such claims are deceptive if participants generally do not achieve such results.”⁵

The Company informed DSSRC that eligibility for the trip requires Elite status and that the featured incentive trip was an earned trip based on work. Notwithstanding, it’s a fundamental principle of advertising law that objective claims for products or services represent explicitly or by implication that the advertiser has a reasonable basis supporting these claims and an advertiser must support any reasonable interpretation of its disseminated claims.⁶ The Company did not provide evidence indicating that the typical MONAT salesforce member earns an incentive trip with MONAT and noted that the subject incentive trip occurred in 2023. However, as the Company continues to promote incentive trips on its website, DSSRC recommended that MONAT include a clear and conspicuous disclosure that highlights the number of salesforce members who typically earn the advertised company incentive trip and that the disclosure be in close proximity to the triggering claim.⁷

DSSRC recognized the action taken by MONAT to disable the video that appears on the Company’s “Motor Club” webpage.⁸ However, DSSRC also determined that although the Motor Club webpage does, when scrolling down, include a link to “Terms and Conditions” of the incentive, the location of the link does not adequately alert consumers or potential salesforce members of the conditions necessary to receive such an incentive and there are no other any material conditions regarding eligibility for the vehicle incentive provided on the webpage.

As such, DSSRC recommended that the Company include a clear and conspicuous disclosure that highlights the number of salesforce members who typically earn the advertised car incentive.

In addition, DSSRC remained concerned with the phrase on the MONAT website that states: “Whether you are looking to build a second revenue stream or a full-time business …” DSSRC concluded that one reasonable interpretation of the reference to “a full-time business” would be that the typical MONAT salesforce member can generally expect to earn full-time income.

In its Guidance on Earnings Claims for the Direct Selling Industry, DSSRC noted 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.

While DSSRC recognizes and appreciates the good faith efforts of MONAT to add an income disclosure to this webpage, DSSRC also concluded that the number of MONAT salesforce members earning a fulltime (i.e., career-level) income is so atypical (i.e., .23%) that a disclosure of generally expected income does not qualify and, rather, contradicts the main message of the claim.

Accordingly, DSSRC recommended that the Company remove or significantly modify the claim on the Opportunity page of the MONAT website stating: “Whether you’re looking to build a second revenue stream or a full-time business, MONAT is here to support and reward YOU!”

MONAT YouTube Videos

During the inquiry, MONAT advised DSSRC that “a disclaimer and link to the IDS have been added to the description box of the flagged YouTube videos.” However, when DSSRC attempted to locate the videos and evaluate the adequacy of the disclosure, it appeared that the videos had been disabled.

DSSRC remained concerned with the purported placement of the disclaimers and concluded that, alternatively, removing the videos was necessary and appropriate. While DSSRC did not take issue with the language that was used in the disclosures in these posts (e.g., “In 2021 the average Market Partner earned $831…”), it did determine that the disclosures were too small to be noticeable by viewers and hidden by background images in the video and, as such, would not be considered “clear and conspicuous.” In addition, in light of the fact that MONAT has an updated 2023 IDS, DSSRC recommends updating the disclosure to reflect the most recent average salesforce member income statistics. DSSRC noted that any post or video that references Company incentives should include language in the disclosure that highlights the number of salesforce members who typically earn the incentive being referenced in the post.

Although DSSRC was unable to locate the video testimonials at issue on YouTube, it came to DSSRC’s attention that several of the same video testimonials could be found on the MONAT website.⁹ Several of the testimonials on the webpage discuss atypical earnings that salesforce members received from the Company’s business opportunity, including several videos discussing Company incentives that salesforce members have earned.

As was the case with the videos as they appeared on YouTube, the video testimonials on the webpage do include a disclosure of the average salesforce member earnings from 2021. However, similarly, the disclosure included in the videos are faint, very small, and, as noted above, not clear and conspicuous to viewers of the testimonials. Additionally, the disclosures reference outdated earnings data from 2021. No other disclosures regarding the earnings results that could be generally accepted by potential salesforce members appear on the website.

Pursuant to section 255.2(b) of the FTC Guide on the Use of Endorsements and Testimonials,

“An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.”

Moreover, the FTC states in its Business Guidance Concerning Multi-Level Marketing that “to be clear and conspicuous, the disclosure must be prominent, worded in a way consumers understand, placed where consumers are likely to look, immediately next to the claim it disclaims, and not easily missed. These principles apply also to disclosures in all multimedia ads, including claims in video and audio ads.”¹⁰

Accordingly, in the absence of a clear and conspicuous disclosure regarding the income or incentives that can be generally expected by Company salesforce members from the MONAT business opportunity, DSSRC recommends that the Company either remove the video testimonials from its website or modify its presentation of the testimonials so that the generally expected earnings results are disclosed clearly and conspicuously.

Social Media Posts

MONAT made a good faith effort to address DSSRC’s concerns regarding several social media posts that were brought to its attention by either having the claim at issue in the post modified or by requesting that the social media post be removed in its entirety.¹¹ The Company facilitated the removal of five of the social media posts at issue and worked to reconcile the remaining social media posts.

For example, in one Instagram post pertaining to a MONAT 2022 incentive trip to the Bahamas, the Company moved its disclosure of the 2022 average income for Company salesforce members to the beginning of the post where it appears prominently and would be noticeable to the viewer of the post. Notwithstanding this change, because this post pertained to an incentive trip, rather than an express income claim, DSSRC recommended that the disclosure should include material information about Company incentive trips such as the number or percentage of salesforce members who were eligible for (and availed themselves of) Company incentive trips.

With respect to the three posts that referenced million-dollar earners, the Company made a good faith attempt to reach out to the individuals responsible for disseminating the posts and requested that the unauthorized earnings claim be addressed. Two of the individuals failed to respond to MONAT’s requests and their accounts were subsequently terminated. The third salesforce member removed all “million dollar” verbiage from the post.

While DSSRC appreciated the Company’s good faith efforts, it remained concerned with existing language in the modified post that references “earning a paycheck” and, more specifically, “the thousands of other families earning right alongside of me.” DSSRC determined that the post necessitated a disclosure of the average income that could be generally expected by the typical MONAT salesforce member. Although the salesforce member did include the Company’s IDS in the comment section of the post, DSSRC determined that reference to the IDS, alone, in the post (i.e., without including an indication of the generally expected income that the typical salesforce member earns) was not an adequate disclosure for the earnings claim.¹²

DSSRC recommended that this post either be discontinued or significantly modified.

Conclusion

DSSRC appreciated MONAT’s good faith efforts to address its concerns. The Company removed nine of the posts at issue, made several modifications to existing posts, and is in the process of removing several other posts. The Company also terminated the accounts of two salesforce members that did not respond to MONAT’s requests to modify or remove their posts.

With respect to MONAT’s presentation of incentive trips on its website and in social media, DSSRC recommended that the company (and/or its salesforce members) include a clear and conspicuous disclosure in the post that highlights the number of salesforce members who typically earn the advertised company incentive trip and that the disclosure be in close proximity to the triggering claim.

DSSRC recognized the action taken by MONAT to disable the video that appears on the Company’s “Motor Club” webpage.¹³ However, DSSRC also determined that the location of a “Terms and Conditions” link on the webpage did not adequately alert consumers or potential salesforce members of the conditions necessary to receive such an incentive and recommended that the Company include a clear and conspicuous disclosure that highlights the number of salesforce members who typically earn the advertised car incentive.

DSSRC also concluded that reference to “a full-time business” would be understood by the reasonable consumer to mean that the typical MONAT salesforce member can generally expect to earn full-time income and recommended that the Company remove or significantly modify the claim on the Opportunity page of the MONAT website stating: “Whether you’re looking to build a second revenue stream or a full-time business, MONAT is here to support and reward YOU!.”

With respect to the YouTube videos identified by DSSRC, DSSRC expressed concern over the placement of disclaimers in the videos and recommended their removal for clarity. Additionally, DSSRC recommended updating MONAT’s earnings disclosure to include 2023 figures and include material information (e.g., the number or percentage of salesforce members who were eligible for and received Company incentives) for referenced incentives. In addition, DSSRC concluded that the video testimonials on the MONAT website were not presented clearly and conspicuously due to their faint and small appearance. DSSRC recommended either removing these testimonials or revising them to clearly and conspicuously disclose the typical and updated earnings results that salesforce members can expect to receive from the MONAT business opportunity.

Lastly, MONAT facilitated the removal of five of the social media posts at issue. With respect to the remaining social media posts, DSSRC again recommended that the Company include a clear and conspicuous disclosure regarding the number or percentage of salesforce members who were eligible for and who received Company incentive trips. Regarding the modified post, which removed references to earning a million dollars, DSSRC remained concerned with language in the post that references “earning a paycheck” and “the thousands of other families earning right alongside of me” and determined that the post necessitated a disclosure of the average income that could be generally expected by the typical MONAT salesforce member. In addition, DSSRC determined that reference to an IDS alone in a social media post was not an adequate disclosure for an earnings claim.

Company Statement

“MONAT is committed to maintaining the highest standards of compliance across our salesforce by providing ongoing oversight and support. We offer a comprehensive suite of online training modules and enhanced resource guides to ensure that all our Market Partners are well-equipped with the knowledge and tools they need to operate with integrity and in accordance with our Policies. By continually updating and expanding these resources, we strive to empower our Market Partners to achieve success while adhering to the best practices in the industry.”

(Case #171, closed on 08/12/24)
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