DSSRC Administrative Closure #312

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company ("Company") that sells adult novelty products regarding nine Facebook posts that communicated earnings claims. DSSRC expressed concern about the posts conveyed claims regarding the potential income a typical salesforce member could earn from the Company's business opportunity, including the possibility of achieving “financial freedom,” “full time income” and that the typical Company salesforce member could earn “over $500” per month.

Upon initiating the inquiry, the Company promptly took corrective action to address the identified social media posts, successfully removing all nine of the posts brought to its attention by DSSRC. DSSRC acknowledged 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 some words or phrases, such as "financial freedom," 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 “bring home over $500,” necessitates evidence indicating that the typical company salesforce members can generally expect comparable earnings from the business opportunity.

In conclusion, DSSRC found that the Company made a bona fide, good-faith effort to address its concerns by promptly removing all nine of the identified posts and by taking necessary steps to have the remaining post 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.

(Administrative Closure #312, closed on 03/20/24)
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