Features

The Commission renews focus on manipulated reviews, online endorsements and child-targeted advertising

By:  Stephanie Ramirez

Whether it’s fake reviews or influencers who hide that they were paid to post, this kind of deception results in people paying more money for bad products and services, and it hurts honest competitors. — Samuel Levine, Director of Bureau of Consumer Protection, FTC

In its continued effort to crack down on false and misleading advertising, the Federal Trade Commission (FTC) is once again seeking public comment on whether to make changes to its Endorsement Guides. This comment period comes just two years after the previous call for public input.

The Endorsement Guides, 16 CFR Part 255, established in 1980 and amended in 2009, provide guidance to businesses and others to ensure that advertising using endorsements or testimonials is truthful. The Guides state, among other things, that advertisers need to be up front with consumers and clearly disclose unexpected material connections between endorsers and a seller of an advertised product. The FTC advises companies to familiarize themselves with FTC guidelines in order to stay in compliance.

Participants accuse channel executives and representatives of a lack of transparency and ineffective self-regulation

By:  David Bland

On June 11–12, critics of the direct selling channel gathered for a second year in a row for their  virtual conference – Multilevel Marketing: The Consumer Protection Challenge. 

Hosted by The College of New Jersey School of Business and organized by William Keep, a professor of marketing and former dean of business at the college, the conference saw the return of several long-time detractors of multilevel marketing as well as first-time appearances by speakers from a wide range of professions and connections to direct selling. 

Similar to the inaugural conference in 2021, this year’s conference excluded direct selling advocates, industry partners and the Direct Selling Association (DSA).

This year’s meeting also, once again, included input from regulators, academics, journalists, former direct selling distributors, consumer advocates, and social media content creators, including an international contingent of speakers representing Australia, the Netherlands, Poland, and Ireland.

Global direct selling sales and participation increase in 2021

By:  SSN Staff

The World Federation of Direct Selling Associations (WFDSA) this week released its report on global direct selling’s sales and salesforce for 2021. The Washington D.C.-based organization announced worldwide direct sales of $186.1 billion for that year, representing a year-over-year increase of 3.3% when excluding China and a 1.5% increase including China, based on a constant currency basis. By using constant currency to report sales figures, the impact of foreign exchange is negated.

The three-year compound annual growth rate spanning 2018-2012 was reported as 3.8%, excluding China and -0.1% with China included. The report notes that during Q1 of 2019, the Chinese government implemented a 100 Day Review of the nutrition supplement industry, which “had a significant impact on certain sectors of the industry.” This problem was dramatically compounded by the disruptions associated with COVID-19 that were occurring at the same time.

The Association renews commitment to regulatory support, reputation improvement and self-regulation

By:  SSN Staff

On June 4, the Direct Selling Association’s (DSA) Strategic Planning Committee unanimously approved the DSA Strategic Plan 2022 to represent the Association’s priorities through 2026. The plan seeks to refine and focus the DSA’s current objectives to meet the marketplace and regulatory changes anticipated in the coming years. 

Plan 2022, as it is referred to, lists a number of these changes, including economic uncertainty, demographic changes in the direct selling salesforce, bans of certain business opportunities on social media platforms, attacks by industry critics including short-sellers, and the demand for better data regarding the direct selling business model and company business practices.