DSSRC Administrative Closure #262
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding fourteen product performance claims and one earnings claim disseminated on social media by Company salesforce members. The claims at issue were disseminated on Facebook and YouTube.
DSSRC contacted the Company and expressed concern regarding product performance claims that communicated the efficacy of the Company’s products to treat, among other conditions, obesity, arthritis, depression, anxiety, diabetes and cancer. The one earnings claim involved a representation that Company salesforce members could earn up to two thousand dollars a month from the business opportunity.
The Company was immediately responsive to the DSSRC inquiry and elected to contact the individuals responsible for the posts rather than attempt to substantiate the claims.
The Company informed DSSRC that it was able to effectuate discontinuance of four of the fifteen posts at issue (all involving product performance claims). With respect to the remainder of the social media posts, the Company noted that three of the social media posts were made by consumers who were not past or current salesforce members with the Company, although the Company did use its best efforts to contact these consumers and request that the posts be removed. In addition, DSSRC was informed that the one YouTube video which communicated the earnings claim at issue was a product review video and the Company was unable to find any information regarding the owner of the video. Lastly, the Company stated that one of the remaining videos identified by DSSRC discussed a product that had no affiliation to the Company.
Regarding the other posts that remain publicly available, the Company noted almost all of the posts originated prior to 2020 and that the company went through an entire re-brand several years ago which involved significant internal and system updates, new vendors and new service providers. Thus, the Company explained, many of the posts that it was not able to get removed originated before the Company re-brand and re-structure, and a number of the accounts for the customers and salesforce members found in the subject posts no longer exist in the Company’s systems and, those accounts that survived, have not been active or had any association with the Company for a number of years.
Nevertheless, the Company explained that, regardless of their activity levels, it sent communications to each individual that it could identify based on the listings found on in the DSSRC inquiry – and made a good-faith effort to send follow-up communications to each of the individuals it was able to link to. As a result, the Company was able to get several responses and those individuals did remove those posts despite not being active salesforce member for some time. The Company also informed DSSRC that any of the individuals that have not been active for several years still received communication from the Company in hopes that they would comply and remove the posts, but unfortunately several of those individuals did not take any remedial action.
The Company advised DSSRC that it has taken the following, additional actions to demonstrate that it was addressing DSSRC’s concerns:
- The Company has taken enforcement action and did suspend and terminate the Company’s relationships with individuals who have not been active with the company in years – following current Company policies regarding inactivity.
- The Company provided DSSRC with copies of multiple internal emails were sent out to the individuals responsible for the posts.
- Examples of unauthorized claims have been added to compliance trainings with Company salesforce members.
- The Company increased its compliance training with its salesforce focusing on medical and income claims, hosted a Q&A quiz, had a Compliance booth set up at a Company EXPO and helped better educate the field on the types of posts identified by DSSRC as well as the Company’s Policies & Procedures. Future plans have already been made to create and do more compliance trainings to help better equip the field on how they can compliantly promote the Company and its products, and;
- The Company uses a 3rd party monitoring systems and has ramped up its efforts regarding proactive compliance and monitoring.
As noted in past DSSRC inquiries, if a non-compliant post was made by a salesforce member that later became inactive, DSSRC recommends that, promptly upon learning of such a claim, a direct selling company should make a bona fide, good faith effort to contact the former salesforce member to request that the improper claim be removed. DSSRC agreed that the Company demonstrated a good faith effort by the actions that it has taken to remove four of the post made by inactive salesforce members and suspend the accounts of those individuals responsible for the posts and who had any previous affiliation with the Company.
In conclusion, based upon the good faith efforts of the Company to address its concerns, DSSRC administratively closed its inquiry.
(Administrative Closure 262, closed on 1/18/23)
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