DSSRC Administrative Closure #311

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company ("Company") that sells health supplements regarding two social media posts that communicated earnings claims, two posts that communicated health-related claims, and one claim on the Company website that communicated a parity claim regarding the effectiveness of the Company’s products. DSSRC expressed concern that the posts conveyed claims regarding the potential income a typical salesforce member could earn from the Company's business opportunity, including the possibility of becoming a “millionaire” and that the typical Company salesforce member could earn “$10,000 a month.” The health-related claims included representations that Company products could effectively treat depression, hormonal imbalance, and chronic pain. The website claim pertained to the unparalleled efficacy of its products.

Upon initiating the inquiry, the Company promptly took corrective action to address the identified social media posts, successfully removing three of the posts brought to its attention and modifying two others to remove problematic language. 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 1 of DSSRC's Guidance on Earnings Claims for the Direct Selling Industry (the “Guidance”) states that it is misleading for a direct selling company and/or its salesforce members to make any earnings claims unless the direct selling company and/or its salesforce members: (A) have a reasonable basis for the claim at the time the claim is made; and (B) have documentation that substantiates the claim at the time the claim is made. In addition, Section 10 of the guidance notes that [d]epending on the level of success, some income claims and lifestyle claims may be so extraordinary that they cannot be effectively qualified by a disclosure of generally expected results. DSSRC determined that the claim at issue stating "[a]nyone can become a millionaire," is an example of a claim that is so extraordinary and atypical that it could not be appropriately qualified, and that the Company’s removal of the post was necessary.

With respect to the product performance claims, DSSRC noted that pursuant to the Federal Trade Commission’s (FTC) 2022 Health Products Compliance Guidance, the FTC’s substantiation standard is a rigorous one, particularly when claims relate to health. The FTC has more specifically defined its standard for health-related claims as “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 addition, the FTC requires that the research must be “sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true.”[1] In the absence of any data to support the product performance claims at issue, DSSRC agreed that the Company’s removal of the product performance claims at issue was necessary and appropriate.

In conclusion, DSSRC determined that the Company made a bona fide, good-faith effort to address its concerns by promptly removing or modifying all five of the identified claims that were brought to its attention during this inquiry.

(Administrative Closure #311, closed on 03/19/24)
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