DSSRC Administrative Closure #265

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding nine earning claims disseminated on social media by Company salesforce members. The claims at issue were disseminated on Facebook, YouTube, and Twitter.

DSSRC contacted the Company and expressed concern that the posts included representations that prospective salesforce members can achieve “financial freedom” and/or earn substantial income through participation of the Company’s business opportunity. It also included representations that prospective Company salesforce members can replace their income and “build generational wealth”.

Shortly after commencement of the inquiry, the Company promptly responded to DSSRC and immediately had eight of the nine posts removed. With the respect to the remaining post, the Company informed DSSRC that the salesforce member responsible for the post has not responded to the Company’s request to remove the social media post at issue and as a result has been terminated by the Company. The Company also informed DSSRC that it plans to increase training for both new and old consultants on complaint business practices and marketing claims in order to prevent communicating similar claims in the future.

DSSRC determined that the actions taken by the company were necessary and appropriate. More specifically, section 6 of the 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 “residual income”, “unlimited income”, “full-time income”, “replacement income” “quit your job” or any substantially similar statements or representations. It is further noted in this section of the DSSRC Guidance 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 the term “financial freedom”.¹ 

Accordingly, based upon the good faith actions taken by the Company’s to remove the earnings claims at issue in the eight of the nine posts and its ongoing efforts to address DSSRC’s concerns with respect to the one remaining post, DSSRC administratively closed this inquiry.

(Administrative Closure 265, closed on 03/01/23) 

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