DSSRC Administrative Closure #310

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company ("Company") that sells personal protective equipment regarding fifteen social media posts that communicated earnings claims. Thirteen of the posts were communicated on Facebook, one appeared on Pinterest and the remaining blog post was created by a third party with no affiliation to the Company. DSSRC expressed concern that the posts conveyed claims regarding the potential income that a typical salesforce member could earn from the Company's business opportunity, including the possibility of achieving “financial freedom,” earning “full time income,” and that the typical Company salesforce members could “make a small investment that has a large, life changing return.”

Upon initiating the inquiry, the Company promptly took corrective action to address the identified social media posts, successfully removing ten of the posts brought to its attention by DSSRC. DSSRC acknowledged that the Company's actions were necessary and appropriate. As outlined in Section III of the DSSRC Policy and Procedures, DSSRC evaluates the truthfulness, accuracy, and substantiation of earnings and product claims made by direct selling companies and their salesforce members.

More specifically, Section 6 of DSSRC's Guidance on Earnings Claims for the Direct Selling Industry states that some words or phrases, such as “financial freedom,” or “make a small investment that has a large, life changing return,” carry a high risk of being misleading when communicated in a general context. Moreover, Section 7 of DSSRC's Guidance on Earnings Claims for the Direct Selling Industry states that all earnings claims should be supported by substantiation demonstrating that the earnings communicated in the claim are accurate as to the individual or individuals depicted in the claim. Accordingly, a statement like those at issue, asserting that a salesforce member can earn “full time income,” necessitates evidence indicating that the typical company salesforce member can generally expect comparable earnings from the business opportunity.

As DSSRC has noted in previous self-regulatory inquiries, when a direct selling company is made aware of improper claims made by an individual who was an active salesforce member when such claim was made but has since become an inactive salesforce member of the company, DSSRC acknowledges that the direct selling company may not be able to require such individual to remove a social media post. In that instance, DSSRC nonetheless recommends that the direct selling company make a bona fide, good-faith effort to have the improper post removed or appropriately modified.

In this matter, five of the social media posts at issue remain unchanged and publicly available. Notwithstanding, DSSRC determined that the Company has made verifiable, good-faith efforts to have each of these remaining posts removed or modified to remove the language at issue. The Company attempted to contact the individuals responsible for these posts and has provided DSSRC with copies of correspondence sent to these individuals as confirmation of their efforts. Moreover, the Company confirmed that it attempted to contact Facebook to have the posts removed but the platform was uncooperative.

In conclusion, DSSRC found that the Company made a bona fide, good-faith effort to address concerns by promptly removing ten of the identified posts and by taking necessary steps to have the remaining five posts either removed or modified. The inquiry was administratively closed based on the Company's demonstrated good faith actions in addressing the issues brought to its attention.

Share on LinkedIn