DSSRC Administrative Closure #261

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding ten earnings claims that were disseminated on social media by Company salesforce members. The claims at issue were all disseminated on Facebook.

DSSRC contacted the Company and expressed concern that the posts that formed the basis of the inquiry included, but were not limited to, unqualified claims that the Company’s business opportunity offered “financial freedom,” “easy income,” “unlimited income potential” and that a salesforce member could “replace my income”

Section 13 of the FTC’s 2018 Business Guidance concerning Multi-Level Marketers, business opportunities may claim that participants, while not necessarily becoming wealthy, can achieve career-level income. They may represent through words or images that participants can earn thousands of dollars a month, quit their jobs, “fire their bosses,” or become stay-at-home parents. If participants generally do not achieve such results, these representations likely would be false or misleading to current or prospective participants.¹

Moreover, Section 6 of DSSRC’s Guidance on Earnings Claims for the Direct Selling Industry notes that while DSSRC will evaluate any claim based upon the context in which the claim appears and the potential net impression of such claim to the audience, 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. Other terms, such as “passive income” and “residual income,” are prohibited when they convey that income can be continuously earned by salesforce members with little or no ongoing effort.²

Shortly after commencement of the inquiry, the Company promptly responded to DSSRC and took remedial action to address DSSRC’s concerns. The Company was able to effectuate discontinuance of 8 of the 10 social media posts and modified one post to remove the earnings claim that was of concern to DSSRC. With respect to the remaining post, the Company reached out to the salesforce member to request removal of the post, but the salesforce member failed to respond. Accordingly, the Company terminated the account of the salesforce member.

DSSRC determined that the Company made a genuine, good faith effort to address its concerns. Accordingly, based upon the Company’s bona-fide efforts, DSSRC administratively closed the inquiry.

(Administrative Closure 261, closed on 1/17/23)

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