DSSRC Administrative Closure #314

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that markets skin care and cosmetic products.  The claims at issue consisted of two product performance claims and seven earnings claims that were disseminated on Facebook.

DSSRC contacted the Company and expressed concern that the earnings posts included representations conveying that participants in the Company’s business opportunity could achieve financial freedom and earn significant income. In addition, DSSRC identified two posts indicating that the primary ingredient in the Company’s product was effective in treating several pain and skin conditions.

With respect to the earnings claims at issue, the Company informed DSSRC that it immediately removed all of the earnings posts at issue. In addition the Company noted that it was in the process of: a) revising its internal Policies to prohibit earnings claims; b) adapting a range-based income disclosure statement and posting it on its website; c) training its salesforce members on the risks of disseminating earnings claims; d) securing the services of a third-party monitoring service to identify non-compliant claims, and e) ensuring that problematic posts are promptly removed.

The Company was successful in having one of the two product performance posts at issue removed and informed DSSRC that the post which remains publicly available was disseminated by an individual who left the Company. It attempted to contact the individual to have her remove the post but, despite repeated attempts, was unsuccessful.

Notwithstanding its willingness to remove the posts with the product performance claims at issue, the Company also provided DSSRC with a clinical study which it maintained supported the product efficacy claims.  The study assessed the ability of the product’s primary ingredient to treat wrinkles that accompany aging skin.  

DSSRC determined that the actions taken by the Company to address the concerns at issue in this inquiry were necessary and appropriate.

As DSSRC has noted in previous self-regulatory inquiries, DSSRC’s Guidance on Earnings Claims for the Direct Selling Industry states that some words and phrases commonly used in earnings claims can carry a particularly high risk of being misleading to consumers. Such words and phrases include claims such as “financial freedom,” “full-time income,” “replacement income,” “residual income,” and “career-level income.” Furthermore, earnings claims must be substantiated and representative of a level of earnings that can be generally expected by the audience. 

With respect to health-related product performance claims, the Federal Trade Commission has stated that it expects that advertisers have a reasonable basis for all product claims and 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.”¹

DSSRC appreciated the good faith efforts of the Company to remove eight of the nine social media posts that were brought to its attention and for the proactive steps that it has taken to increase its internal compliance process.

While DSSRC remained concerned with the one remaining post which included product performance claims, it is acknowledged that a direct selling company may not be able to require the individual to remove such claim if the individual is no longer active with the company. In that instance, if the social media platform where the subject post was made provides a mechanism for reporting trademark or copyright violations, DSSRC recommends that the direct selling company promptly utilize such mechanism and seek removal of the subject claims and posts. If efforts to utilize a mechanism for reporting trademark or copyright violations are unsuccessful or if the subject claim occurred on a website or platform without a reporting mechanism, DSSRC recommends that in addition to making a bona fide good faith effort to contact the individual as described above, the company contact the website or platform in writing and request removal of the subject claim or post.

Accordingly, DSSRC recommends that the Company continue its best efforts to facilitate the removal of the remaining post.

In conclusion, based upon the good faith actions taken by the Company to remove eight of the nine posts that were the subject of this inquiry and its good faith efforts to facilitate the removal of the remaining post that was disseminated by an inactive salesforce member,  DSSRC administratively closed the inquiry.

(Administrative Closure #314, closed on 04/05/24) 
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