DSSRC Administrative Closure #319

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that manufactures, and internationally distributes preparation, storage, and serving containers for the kitchen and home. The DSSRC inquiry involved 25 earnings claims (including incentive-based claims) disseminated on social media platforms including YouTube, Facebook, Instagram and Twitter and on salesforce member blogs. DSSRC expressed concern that the claims communicated that salesforce members typically earn significant income from the Company’s business opportunity.

After commencing the inquiry, the Company informed DSSRC that it has already been in the process of addressing the posts at issue. The Company noted that 75% of the listed posts (19 out of 25 posts) were from 2021 or earlier and from pages and channels no longer used. More specifically it was noted that these outdated posts were not created with reference to current Federal Trade Commission, Direct Selling Association, Company and other applicable guidelines and were no longer intended to be referenced by anyone and have since been removed. The Company also asserted that four of the 19 posts were on an old company blog that has since been redirected to the Company’s official website. Seven of the 19 posts were on the Company’s historical YouTube channel archive and have since been disabled.

With respect to the six posts that were identified by DSSRC that were disseminated after 2021, the Company informed DSSRC that five of the six were posts made by independent sales consultants and one was made by the Company. The Company stated that one of the 2023 posts was from an independent consultant in Namibia, who was not directing the post to US citizens and that it would bring the post to its colleagues’ attention for their determination as to whether this is in accordance with Namibian law. Of the five remaining posts that were disseminated after 2021, the Company was able to have three of the posts disabled. With respect to one of the posts that referenced Company incentives, the Company informed DSSRC that it is currently in the process of preparing a disclosure regarding the number and/or percentage of salesforce members who received such incentives in the prior calendar year and committed to DSSRC that such disclosure would be presented clearly and conspicuously and in close proximity to the incentive claim.

DSSRC appreciated the Company’s good faith efforts to reconcile all of these posts and concluded that the Company’s actions were necessary and appropriate.

With respect to the one remaining social media post which stated that salesforce members could earn “a little money as a side gig or up to 6 figures,” the Company stated that it was in the process of implementing a disclosure of generally expected results. However, DSSRC remained concerned that a claim that salesforce members could earn “six figures” from the business opportunity could not be effectively qualified by such a disclosure. As DSSRC states in its Guidance on Earnings Claims for the Direct Selling Industry “depending 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” and that some words and phrases are prohibited when made to a general audience of prospective or current salesforce members including statements such as “quit your job,” “be set for life,” “make more money than you ever have imagined or thought possible,” “unlimited income,” “full-time income,” “replacement income,” “career-level income,” or any substantially similar statements. It was concluded that a claim that salesforce members could earn “six figures” would be a term that is substantially similar to those phrases which should not be communicated by direct selling companies.

Accordingly, DSSRC requested that the Company take the additional, good faith step to have this claim removed from social media. Subsequently, in the spirit of voluntary self-regulation, the Company committed to addressing DSSRC’s concerns regarding the one remaining social media post.

Based upon the Company’s genuine efforts to satisfactorily address all of the claims at issue in this inquiry, DSSRC administratively closed the matter.

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