DSSRC Administrative Closure #283

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding eight earning claims made by salesforce members on Facebook as well as by the Company on the Company’s website.

DSSRC expressed concern that the social media posts could be reasonably interpreted by consumers to mean that prospective salesforce members could earn substantial or significant income through participation in the Company’s business opportunity. The posts included representations that prospective salesforce members could earn full-time income, pay off debt, and achieve financial freedom.

The Company promptly responded to DSSRC’s inquiry and began contacting the salesforce members responsible for the posts at issue to effectuate removal of the posts. The Company informed DSSRC that it took its compliance obligations seriously and had disseminated training refreshers to its salesforce members. Ultimately, the Company was successful in removing all eight of the claims that were identified by DSSRC.

DSSRC determined that the actions taken by the Company were necessary and appropriate pursuant to Section 6 of the DSSRC’s Guidance on Earnings Claims for the Direct Selling Industry. The DSSRC Guidance 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.”

Based upon the Company’s bona fide, good faith efforts to remove the earnings claims at issue, the inquiry was administratively closed.

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