CBBB Self-Regulatory Program Will ‘Elevate Reputation’ Of Direct Selling Industry
Similar to the National Advertising Division, the Direct Selling Self-Regulatory Council will provide a forum for competitive challenges in addition to routine monitoring of the direct-sales industry. Kelley Drye attorney John Villafranco predicts “greater self-regulatory focus on income misrepresentations and lavish lifestyle claims in the months ahead.”
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Maybe there’s truth in aloe, but there’s too little of it in earnings and health-related claims made by wellness and skin-care firm Aloe Vertitas and its Lifestyle Coaches, according to the direct-selling industry’s self-regulatory body. The DSSRC is referring the company to the Federal Trade Commission for failure to state its compliance or appellate intentions.
Advocare "is admitting that it operated as a pyramid and they are agreeing to no longer operate in multi-level marketing," says FTC Consumer Protection direct Andrew Smith. Firm is marketing sports, weight-loss and wellness products on a single-tier model with distributors' compensation based on selling directly to end-users.
Guidance notes settlements Herbalife and Vemma Nutrition made in 2016 as examples of its enforcement policies. FTC prohibition against misleading claims extends to requiring direct sellers to base claims of distributors' compensation on sales to consumers, not on measures such recruiting more distributors.