DSSRC Administrative Closure #278

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

DSSRC expressed concern that the product performance claims included representations that the Company’s products could treat a series of health-related conditions including, but not limited to, allergies, anxiety, high blood pressure, migraines, fibromyalgia, and weight loss. The earnings claims at issue included, but were not limited to, representations that prospective Company salesforce members could pay off debt, earn unlimited income and achieve financial freedom.

Shortly after commencement of the inquiry, the Company began contacting the salesforce members responsible for the posts in question to have the claims removed. The Company was successful in removing eleven out of the seventeen social media posts that were identified by DSSRC.

With respect to the remaining posts, which were disseminated by nonresponsive or inactive salesforce members, the Company demonstrated to DSSRC that it made a bona fide good faith effort to have the posts removed or significantly modified. More specifically, the Company stated its intent to initiate disciplinary action, including suspension of respective salesforce member business and termination of respective salesforce member contacts, and to request that the remaining non-compliant posts be removed by the corresponding social media platforms.

DSSRC determined the actions taken by the company were necessary and appropriate. As DSSRC has noted in past cases, it is well established that health-related claims must be supported by competent and reliable scientific evidence. The Federal Trade Commission generally defines competent and reliable scientific evidence as “tests, analyses, research, or studies that (1) have been conducted and evaluated in an objective manner by experts in the relevant disease, condition, or function to which the representation relates; and (2) are generally accepted in the profession to yield accurate and reliable results.”¹ Moreover, with respect to earnings claims, Section 6 of the DSSRC’s Guidance on Earnings Claims for the Direct Selling Industry states that some words and phrases are prohibited when made to a general audience of prospective or current salesforce members. Such words and phrases include “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.”

In conclusion, based upon the Company’s good faith actions to address DSSRC’s concerns by removing eleven social media posts and engaging in appropriate and ongoing action to address the remaining posts, the inquiry was administratively closed.

(Administrative Closure #278, closed on 6/14/23)

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