DSSRC Administrative Closure #321

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company ("Company") that markets professional service products including legal and identity theft solutions in the United States and Cannada regarding 13 earnings claims disseminated on Facebook, Instagram and on the Company website. DSSRC was concerned that the claims conveyed messages suggesting that potential independent contractors could achieve significant income through participation in the Company's business opportunity. This inquiry was initiated by DSSRC as part of its continuous independent monitoring of product and income claims in the direct selling industry and following an investigation conducted earlier this year by a consumer advocacy group into earnings claims made by direct selling companies.

The Company responded expeditiously to the inquiry and reinforced its commitment to presenting its direct selling opportunity and related potential earnings in a truthful and accurate manner as well as ensuring that its independent salesforce members make truthful and non-misleading claims while pursuing the Company's business opportunity. The Company stated that its earnings claims are supported by objective evidence, and that it implements a robust compliance program to review materials, as well as train, monitor, and enforce its standards for claims made in the field. It was also noted by the Company that it was in the process of updating its IDS and other disclosures.

Notwithstanding, in the spirit of voluntary self-regulation, the Company informed DSSRC that immediately after receipt of the DSSRC Notice of Inquiry, it contacted the individuals responsible for disseminating the claims at issue and requested that the posts be modified or discontinued. Accordingly, the Company with successful in removing 12 of the 13 posts at issue in the inquiry. With respect to the one remaining post, the Company indicated that the individual responsible for the post was no longer an active salesforce member and that it attempted to contact the individual several times to have the post removed. The Company also confirmed to DSSRC that it reported the post to Facebook and requested that it be removed.

DSSRC expressed its appreciation to the Company for its good faith actions to address the concerns in this inquiry and determined that the Company’s actions were necessary and appropriate. As noted in section 7 of the DSSRC Guidance on Earnings Claims in the Direct Selling Industry, 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. Atypical earnings claims should also be accompanied by a clear and conspicuous disclosure regarding the income that can be generally expected by the typical salesforce member in the depicted scenario. Such claims should also be otherwise truthful and non-misleading.

Based upon the Company’s genuine, good faith efforts to adequately address DSSRC’s concerns, the inquiry was administratively closed.

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