DSSRC Administrative Closure #236

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding certain earnings claims that were disseminated on social media by the Company’s salesforce members. The claims at issue included fourteen (14) posts that were disseminated on Facebook and YouTube, and included unlimited income claims (e.g., “unlimited income potential”), financial freedom income claims (e.g., “it’s given me financial freedom”) and residual income claims (e.g., “residual income kind of change”). DSSRC expressed its concern to the Company that these posts communicated statements of atypical earnings regarding the amount of income that could be generally expected by the typical salesforce member participating in the Company’s business opportunity.

The Company promptly responded to DSSRC’s inquiry and agreed that the earnings claims at issue in this inquiry were unsupported and should not have been made. The Company was able to have thirteen (13) of the social media posts taken down shortly after DSSRC commenced this inquiry.

As for the one (1) remaining post, the Company informed DSSRC that the accounts of the salesforce member responsible for the post was terminated before its receipt of the DSSRC Notice of Inquiry. The Company informed DSSRC that it has submitted a request to Facebook to remove the post based on trademark violations.

The Company explained that it has a compliance department that is tasked with compliance training and education, monitoring the field for improper claims, and enforcing the company’s policies regarding income and earnings claims. When the Company becomes aware of improper claims made by salesforce members, the compliance department works with them to correct those claims and to train and educate salesforce members on what are permissible and impermissible claims.

Additionally, the Company informed DSSRC that it is in the process of developing additional training and educational materials and presentations to train and educate its salesforce members on how to make appropriate income and earnings claims and also to train and educate them on the types of claims that can never be made. Moreover, the Company stated that it is in the process of creating and disseminating disclosures for use Stylists when they make income claims and plans to conduct trainings on how those disclosures must be incorporated into promotional materials, including social media posts. The company also committed to continue to take appropriate action under its Policies and Procedures when it becomes aware of improper income or earnings claims.

Based upon the good faith efforts exercised by the company to address DSSRC’s concerns, DSSRC administratively closed the inquiry and indicated to the Company that it will continue to monitor the earning claims being disseminated by the Company and its salesforce members, including the status of the remaining post.

(Administrative Closure #236, closed on April 13, 2022)
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