DSSRC Administrative Closure #299
The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that markets health and wellness products regarding nine earnings and health claims disseminated on Facebook by Company salesforce members.
DSSRC expressed concern that the posts communicated non-representative claims regarding the amount of income that the typical salesforce member could earn from the Company’s business opportunity, including the potential to replace their current income or achieve “financial freedom.” Additionally, DSSRC expressed concern that the product performance claims included representations that the Company’s product could treat serious health-related conditions including cancer, depression, and fatigue.
Following the commencement of the inquiry, the Company took prompt action to address the social media posts. The Company was successful in removing all of the nine posts identified by DSSRC.
DSSRC agreed that the Company’s actions were necessary and appropriate. As noted in Section III of the DSSRC Policy and Procedures, DSSRC reviews earnings claims and product claims made by any direct selling company (i.e., companies who sell their products and services directly to consumers through an independent salesforce) and/or its salesforce members and evaluates the truthfulness, accuracy, and substantiation of such earnings and product 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 but are not limited to “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.”
In conclusion, DSSRC determined that the Company demonstrated that it made a bona fide, good-faith attempt to address DSSRC’s concerns by removing the eleven posts identified. Given the Company’s bona-fide efforts to address these concerns, this inquiry was administratively closed.
(Administrative Closure #299, closed on 11/28/23)
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