DSSRC Administrative Closure #285

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding nine earnings claims and one product performance claim disseminated on Facebook by Company salesforce members.

DSSRC expressed concern that the earnings claims included representations that prospective salesforce members could earn unlimited levels of income and achieve financial freedom. Additionally, DSSRC expressed concern that the product performance claim included a representation that the Company’s product could treat serious health-related conditions including cancer, cholesterol, and diabetes.

Following commencement of the inquiry, the Company took prompt action to address the social media posts. The Company was successful in removing or significantly modifying all ten posts identified by DSSRC. The Company further informed DSSRC that it would be conducting a compliance training for its salesforce members.

DSSRC agreed that the Company’s actions were necessary and appropriate. 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.”

With respect to product performance claims, DSSRC has noted in past cases that health-related claims must be supported by competent and reliable scientific evidence. Though the FTC expects that advertisers have a reasonable basis for all product claims, the standard of substantiation for health claims is particularly rigorous. The FTC has defined the health claim substantiation standard as requiring “competent and reliable scientific evidence” in the form of “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.”

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


(Administrative Closure #285, closed on 7/27/23)

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