DSSRC Administrative Closure #333

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company (“Company”) that markets sportswear apparel regarding 14 earning claims disseminated on social media by Company salesforce members. The claims at issue were communicated on Facebook, Instagram and TikTok.

DSSRC contacted the Company and expressed concern that the posts included representations that prospective salesforce members can achieve “financial freedom” and/or earn substantial (e.g., full-time) income through participation in the Company’s business opportunity.

The Company recognized that several of the earnings claim at issue were not appropriate and, after its receipt of the DSSRC Notice of Inquiry, immediately began contacting the salesforce members responsible for the posts to have the claims removed and/or modified in the spirit of voluntary self-regulation. The Company was successful in removing 10 of 14 social media posts that were identified by DSSRC. With respect to the four remaining posts, one post was modified by removing reference to the Company as well as an incentive-related hashtag. The Company provided DSSRC with a copy of its communication regarding another post that remains accessible on TikTok and which was disseminated by an inactive salesforce member, requesting that the post be removed. A third post was modified by the Company by removing mention of the word “prosperity.” As to the final post (i.e., two women kayaking), DSSRC determined that because the post (or any accompanying posts in the salesforce member’s social media feed) did not mention the Company by name nor did it refer to any Company incentive award, it did not warrant any further action on behalf of the Company. Notwithstanding, as a precaution, the Company attempted to contact the salesforce member to have the post removed.

DSSRC appreciated the good faith efforts taken by the Company to address its concerns and determined that its remedial actions were necessary and appropriate. More specifically, section 6 of the DSSRC’s Guidance on Earnings Claims for the Direct Selling Industry notes that while DSSRC will evaluate any claim based upon the context in which the claim appears and the potential net impression of such claim to the audience, some words and phrases are prohibited when made to a general audience of prospective or current salesforce members. Such words and phrases include statements such as “financial freedom” and ‘fulltime income”. It is further noted in this section of the DSSRC Guidance that some words or phrases carry a particularly high risk of being misleading to consumers when communicated in a general context. Such words and phrases include the term “financial freedom”.

In conclusion, DSSRC determined that the Company made a bona fide, good faith attempt to address the concerns in this inquiry by removing and/or modifying all but one post at issue. The Company provided DSSRC with a copy of its correspondence to the inactive salesforce member who was responsible for disseminating the remaining TikTok post, but the salesforce member was not responsive. Accordingly, DSSRC recommended that the Company contact the platform directly to request that the content be removed. DSSRC also recommended that the Company consider posting a comment in the section provided in the social media post stating that the claims contained in the post were not authorized by the Company.

Based upon the Company’s bona fide efforts to address DSSRC’s concerns, the inquiry was administratively closed.

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