DSSRC Administrative Closure #292
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that sells meal kits and other food accessories regarding thirteen earning claims, including five incentive claims, that were disseminated on Facebook, LinkedIn, and TikTok by Company salesforce members.
DSSRC contacted the Company and expressed concern that the posts communicated to consumers that prospective salesforce members could earn substantial or significant income and receive free trips through participation in the Company’s business opportunity. The posts included but were not limited to, representations that prospective Company salesforce members could earn “full time” and “unlimited” income and achieve financial freedom. Further, the Company salesforce members implied that they receive “free trips” and “all-paid vacations” by virtue of becoming a Company salesforce member.
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 all but one of the 13 social media posts 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 (i.e., “the Earnings Claim Guidance”). 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.”
DSSRC also notes that, as per the Earnings Claim Guidance, for purposes of a DSSRC inquiry, an earnings claim includes any claim that conveys that salesforce members may earn or have earned company-sponsored incentives, including vacations or other rewards. With respect to any earnings claim, if the direct selling company does not have substantiation that the experience of the individual making the claim or who is the subject of the claim is representative of what the audience will generally expect to achieve, the advertisement (e.g., social media post) should clearly and conspicuously disclose the generally expected results in the depicted circumstance, such as a disclosure highlighting the percentage of salesforce members who typically earn company incentive trips.
Accordingly, based upon the Company’s good faith actions to remove the earnings claims at issue, the inquiry was administratively closed.
(Administrative Closure #292, closed on 10/06/23)