DSSRC Administrative Closure #334

The Direct Selling Self-Regulatory Council (DSSRC) contacted a direct selling company ("Company") that markets consumer beauty and cosmetic products regarding 22 earnings claims disseminated on social media. DSSRC was concerned that the claims conveyed messages suggesting that potential independent contractors could achieve significant (e.g., replacement income) income, financial freedom, or free trips 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.

The Company promptly responded to the inquiry. In its response, the Company informed DSSRC that it is committed to compliance and preventing the dissemination of unauthorized claims. The Company further informed DSSRC that it now utilizes a state-of-the-art third-party software solution to assist in its monitoring of its salesforce. The Company also informed DSSRC that its policies and procedures expressly prohibit salesforce members from making any direct or indirect earnings representations or projections about amounts earned by them or other participants.

With respect to the specific earnings claims identified in this inquiry, the Company was successful in having 17 of the claims removed from social media. Through its compliance efforts, the Company also informed its participants that the Company’s review of the specific claims identified was not exhaustive and salesforce members were instructed to conduct additional reviews of their social media accounts and remove any similar content. With respect to the remaining claims, the Company noted that the posts were created by individuals who no longer participated in the company and thus did not respond. The Company published a disclaimer on three of the remaining claims via its social media account that stated the Company did not approve of the posts and that they violated the Company’s policies and procedures. A fourth remaining claim did not allow for commenting and a fifth claim was a duplicate. After consultation with DSSRC, the Company agreed to report the remaining social media posts to the platform on which the posts appeared and request that they be removed.

The DSSRC appreciated the Company’s genuine, good faith efforts to address the claims raised in the inquiry. Accordingly, the inquiry was administratively closed.

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