DSSRC Administrative Closure #225
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that markets health and wellness products regarding three earnings claims and six health-related claims disseminated by salesforce members on Facebook and YouTube. The social media posts at issue included earnings claims stating that salesforce members could generally expect to achieve financial freedom and residual income from participating in the Company’s business opportunity as well as “real residual income.” The product performance claims included statements that the Company’s products could treat serious health-related conditions including, but not limited to, diabetes, lupus and fibromyalgia.
In its response, the Company provided DSSRC with a spreadsheet detailing the actions it had taken on all nine of the social media posts brought to its attention.
The Company explained that six of the Posts were made by former salesforce members whose accounts have been terminated. Another salesforce member responsible for one of the posts at issue self-delated their account with the Company and another has been suspended pending the removal of the improper post. The Company provided DSSRC with copies of the termination letters that were sent to its ex-salesforce members and indicated to DSSRC that it had contacted Facebook and YouTube to have the posts disabled.
The Company informed DSSRC that it has been unable to identify the owner and the account of the remaining YouTube post but has taken steps to request its removal from circulation, including filing a complaint with YouTube and contacting the former CEO who appears in the video.
The Company also explained that it is continuing to be proactive in combating improper claims and is continually educating independent promoters and representatives regarding improper product and income claims. This includes virtual training sessions and distribution of the Company Policies and Procedures and social media guidelines. The Company’s Policies & Procedures and accompanying guidelines specifically prohibit express and implied health and earnings claims that may be deemed false or misleading to current or prospective customers or promoters (copies of both documents were provided to DSSRC).
The Company noted that it does not tolerate improper marketing efforts and that its compliance team monitors social media and other platforms daily to ensure any false, misleading, or unsubstantiated claims associated with its products, and/or business opportunity are immediately flagged for removal from circulation. If an independent promoter fails to comply with requests to remove improper claims, their account is terminated.
DSSRC determined that the actions taken by the Company were necessary and appropriate. As DSSRC has noted in previous inquiries, health related product claims must be supported by reliable and competent scientific evidence. With respect to the earnings claims, section 6 of the DSSRC Earnings Claims Guidance for the Direct Selling Industry states that “some words and phrases commonly used in earnings claims can carry a particularly high risk of being misleading to consumers. Such words and phrases include claims such as “financial freedom,” “full-time income,” “replacement income,” “residual income,” and “career-level income.””
DSSRC appreciated the good faith actions taken by the Company and based upon these efforts administratively closed the matter. DSSRC notes that it will continue to monitor the Company’s social media posts and will initiate a compliance inquiry should it identify any future problematic product or income claims being communicated by the Company and/or its salesforce members.
(Administrative Closure #225, closed on March 25, 2022)
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