DSSRC Administrative Closure #272
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding twelve earning claims disseminated on social media by Company salesforce members. The claims at issue were disseminated on Facebook and on the Company website.
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 claims 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 six out of the twelve social media posts that were identified by DSSRC. With respect to the remaining five posts, they have been edited to remove the inaccurate earning representations.
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 (the “DSSRC Guidance”) states 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 Section 6 of the DSSRC Guidance also provides that 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.
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 #272, closed on 4/24/23)
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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).