Direct Selling Summit: Industry Education as a Vehicle to Increasing Consumer Trust

Aug 4, 2021 by Peter Marinello, Vice President, Direct Selling Self-Regulatory Council, BBB National Programs

The BBB National Programs Direct Selling Self-Regulatory Council (DSSRC) hosted direct selling industry business leaders, legal professionals, advertising experts, and salesforce members at the first Direct Selling Summit on July 27. The virtual Summit, an educational event to provide individuals in the direct selling industry with an inside look at how their advertising is monitored, took place following a dynamic year full of marketing challenges for direct selling companies and their independent salesforce members.

At the Direct Selling Summit, industry professionals discussed prevailing issues confronting the direct selling industry during three panels that included in-house and outside counsel as well as company compliance executives. The Summit’s keynote featured BBB National Programs Executive Vice President, Policy, Mary Engle, in a one-on-one interview with the Federal Trade Commission’s (FTC) Beth Delaney, Attorney Advisor for FTC Commissioner Noah Phillips. BBB National Programs President and CEO, Eric D. Reicin, delivered opening remarks. You can learn more about the sessions and speakers who participated in the Direct Selling Summit in our program guide.

Participants in the first panel, Between the Lines: Keeping Clear of Legal Trouble, focused their conversation on a wave of compliance that has swept the direct selling industry in recent years, embracing a posture that focuses on the consumer. More specifically, the panel discussed the FTC advocating for increased use of its penalty offense authority, which puts companies on notice of acts or practices held to be deceptive in litigated administrative cases and then seeks civil penalties against notice recipients if they subsequently engage in those acts or practices. The panel also discussed the FTC’s announcement that it is going to review the Business Opportunity Rule, doing so amid calls for a revised rule that would cover direct selling companies and provide a basis to obtain civil penalties against them for deceptive earnings claims. 

It has been a particularly challenging time for independent salesforce members of direct selling companies. The second panel, Partnering for Success: Working Together to Educate and Empower, addressed the important relationship between the legal and compliance teams in a direct selling company. The panelists provided additional clarity regarding the challenge of recognizing the success of salesforce leaders while remaining cognizant of concerns about depicting atypical success in a direct selling business opportunity. The panel also explored how companies approach compliance oversight of international salesforce members who may not be subject to U.S. rules and regulations.

In the keynote session, On the Record with the FTC, Beth Delaney, expressing her own views and not necessarily those of the FTC or any FTC Commissioner, indicated that we can expect to see increased rule-making at the FTC in the future. In her one-on-one interview with Mary Engle, Ms. Delaney noted that greater latitude in its rule-making would allow the FTC greater flexibility in implementing creative and extensive relief remedies with a greater emphasis on consumer redress and legally mandated repayment of ill-gotten gains received by wrongdoers.

Noting the recent Supreme Court decision (overturning decades of case decisions) that the FTC does not have the authority to seek restitution or monetary redress for consumers under section 13(b) of the FTC Act, Ms. Delaney stated that the FTC is considering bringing cases in collaboration with State Attorneys General who do have the ability to pursue monetary redress as well as pursuing consumer redress in federal district court using Section 19 of the FTC Act. The FTC will also be paying greater attention to potential individual liability in cases. With respect to rulemaking that could impact direct sellers, Ms. Delaney stated that the FTC’s regulatory review of the Business Opportunity Rule could result in increased disclosure requirements. She noted that some at the FTC now prefer the issuance of comprehensive rules rather than case-by-case enforcement.

Ms. Delaney reiterated that self-regulation programs are an important way for the FTC to leverage its resources and that Commissioner Phillips has frequently noted the importance of self-regulatory industry programs such as DSSRC.

The third and final panel, Salesforce Best Practices: Strengthening the Branches, closed the event by continuing the important conversation about open lines of communication between sales leaders and their downline sales teams. This panel reiterated many of the points made by earlier panels about the critical need for salesforce monitoring, adhering to social media best practices, and the key role a salesforce plays in strengthening a direct selling company's brand integrity. The panelists also shared proactive efforts that all companies can take to get in front of some of the most critical challenges direct selling companies face today. 

Of the event, Direct Selling Association President and Chief Executive Officer Joseph N. Mariano said, “The Direct Selling Self-Regulatory Council (DSSRC) is an important self-regulatory mechanism within the direct selling industry. DSSRC’s recent event, the Direct Selling Summit, outlined the critical responsibility of direct selling companies to protect consumers from irresponsible and misleading advertising, and to prioritize the training and education of their independent salesforce members to ensure that all consumers receive truthful messages regarding the companies’ products and the direct selling business opportunity.”

DSSRC was gratified by the direct selling industry’s tremendous support of the Direct Selling Summit as well as its ongoing commitment to communicate truthful and accurate messages about products and the direct selling business opportunity to interested consumers. If you attended the event and would like to have access to the event recording, contact us at events@bbbnp.org

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