DSSRC Administrative Closure #287
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) regarding eleven earning claims disseminated on social media by Company salesforce members. The claims at issue were disseminated on Facebook, Pinterest, and Instagram.
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 (e.g., “six figure income”) through participation in the Company’s business opportunity.
The Company acknowledged that the earnings claims at issue were not appropriate and did not attempt to provide evidence to support the claims. Shortly following commencement of the self-regulatory inquiry, the Company attempted to contact the salesforce members responsible for the posts at issue to have the claims removed. The Company was successful in removing six of the eleven social media posts that were identified by DSSRC. All five of the remaining posts were disseminated on Pinterest. The Company informed DSSRC that it would use its best efforts to ensure that the Company’s salesforce members refrain from communicating similar claims in the future.
With respect to the remaining five posts, the Company demonstrated to DSSRC that it made a good-faith effort to have the posts removed. Specifically, the Company provided DSSRC with copies of the correspondence that was sent to the salesforce members who were responsible for the posts and confirmed that all but one individual was not an active salesforce member. Accordingly, the account of the one individual who was an active salesforce member during the pending DSSRC inquiry and who non-responsive to the Company’s take down request was subsequently terminated. The Company also confirmed that it has contacted Pinterest and requested that the five posts be removed.
DSSRC determined the actions taken by the Company to be necessary and appropriate. 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 “unlimited income,” or any substantially similar statements or representations. Moreover, the DSSRC Guidance also notes 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 but are not limited to “financial freedom.”
In addition, and as DSSRC has noted in previous inquiries, if a non-compliant post was made by a salesforce member that later became inactive (or, as here, terminated by the Company), DSSRC also recommends that the Company take additional steps to remove such claims from the marketplace including utilizing the mechanism that websites and social media platforms may have for removal of trademark or copyright violations. If the subject claim by a former salesforce member occurs on a website or platform without a reporting mechanism, DSSRC recommends that the Company should also contact the website or platform in writing and request removal of the subject claim or post. Accordingly, DSSRC was appreciative of the steps taken by the Company to contact Pinterest in an effort to have the remaining social media posts removed.
In conclusion, DSSRC determined that the Company demonstrated that it made a bona fide, good faith attempt to address DSSRC’s concerns by removing six of the posts at issue and making a good faith effort to have the remining posts taken down. Given the Company’s bone-fide attempt to address DSSRC’s concerns, this inquiry was administratively closed.
(Administrative Closure #287, closed on 8/18/23)
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