DSSRC Administrative Closure #213

The Direct Selling Self-Regulatory Council (“DSSRC”) contacted a direct selling company (“Company”) regarding five social media posts disseminated on Facebook and one YouTube video that were identified pursuant to its monitoring of the direct selling industry. The Facebook posts included references to the efficacy of the Company’s products to treat several health-related conditions including arthritis and COVID-19. The YouTube video at issue included the claim that salesforce members can earn “six to seven figures a year” from the Company’s business opportunity.

In response to DSSRC’s inquiry, the Company noted that all of the posts identified by DSSRC were originally disseminated prior to 2019 and promptly attempted to contact the salesforce members responsible for the claims at issue (several of whom reside outside of the United States) to discuss the reasons why the posts were inappropriate. As a result of its efforts, the Company was able to effectuate immediate removal of four of the six posts. The two remaining posts originated from inactive salesforce members located overseas. The Company informed DSSRC that it has attempted to contact those individuals but has been unsuccessful and is currently contemplating the filing of trademark infringement complaints with the platforms on which the posts were disseminated.

DSSRC agreed that the actions taken by the Company were necessary and appropriate. More specifically, with respect to product performance claims, it is well established that the evidentiary burden for health-related claims is competent and reliable scientific evidence. Competent and reliable scientific evidence, as defined by the Federal Trade Commission (FTC), includes, “tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner, by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.” Accordingly, in the absence of reliable evidence supporting the message that the stated results can be generally expected by consumers, DSSRC determined that the health-related claims were could not be supported in the context in which they were communicated by salesforce members. Moreover, the Company agreed that the earnings claim communicated in the YouTube video was inappropriate and removed the video in its entirety.

With respect to the remaining two social media posts from inactive salesforce members located overseas, DSSRC notes that when a direct selling company is made aware of an improper product (or income) claim that was made by an individual that was an active distributor when such claim was made but that has since become an inactive distributor of the company, it is understood that the direct selling company may not be able to require the former distributor to remove such claim. In that instance, if the social media platform where the subject post was made provides a mechanism for reporting trademark or copyright violations, DSSRC recommends that the direct selling company promptly utilize such mechanism and seek removal of the subject claims and posts. If the subject claim that came to the attention of the direct selling company occurred on a website or platform without a reporting mechanism, DSSRC recommends that in addition to contacting the former distributors in writing as described above, the Company contact the website or platform in writing and request removal of the subject claim or post

Based upon the good faith efforts demonstrated by the Company to address DSSRC’s self-regulatory concerns DSSRC administratively closed this inquiry.

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