DSSRC Administrative Closure #269
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding six earning claims 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 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.
The Company recognized that the earnings claim at issue were not appropriate and did not attempt to provide evidence to support the claims. Shortly after commencement of the inquiry, the Company immediately began contacting the salesforce members responsible for the posts to have the claims removed. The Company was successful in removing five out of the six social media post that were identified by DSSRC. In regards to the remaining post, the video has been updated in which the inaccurate earning claims were removed. The Company also informed DSSRC that it will use its best efforts to ensure that the company’s distributors refrain from 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”. 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
In conclusion, DSSRC determined that the Company demonstrated that it made a good faith attempt to address DSSRC’s concerns. Given the Company’s bona fide efforts to address DSSRC’s concerns, the inquiry was administratively closed.
(Administrative Closure #269, closed on 4/20/23)
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[1] See, Vital Basics, Inc., C-4107 (Consent April 26, 2004); see also In Re Schering Corp., 118 F.T.C. 1030, 1123 (1994).