DSSRC Administrative Closure #263

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that markets clothing products regarding seven earnings claims that were disseminated on Facebook by Company salesforce members.

DSSRC contacted the Company and expressed concern that the posts included representations that prospective salesforce members can achieve financial freedom and earn unlimited income from the Company’s business opportunity.

Shortly after commencement of the inquiry, the Company responded to DSSRC and removed all but one of the social media posts. The remaining post was modified to remove the claim of financial freedom as well as a claim referencing incentive trips and driving a new automobile. The Company also informed DSSRC that it has added new training for its top field leadership on earnings claims and that the ongoing training of salesforce members on the inappropriate dissemination of earnings claims will be the focus of its upcoming annual field leadership meeting.

DSSRC agreed that Company’s actions were necessary and appropriate. 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 “unlimited income” or any substantially similar representations.” Section 6 of the Guidance further notes that some words or phrases carry a particularly high risk of being misleading to consumers when communicated in a general context. Such words and phrases include but are not limited to “financial freedom,” and “time freedom.”

Accordingly, based upon the good faith actions taken by the Company’s to remove the earnings claims at issue in this matter, DSSRC administratively closed this inquiry.

(Administrative Closure 263, closed on 1/19/23)

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