DSA Prepares Response Strategy for Proposed FTC Rules

Bilingual initiative mobilizes companies for possible public comment period

By David Bland

The Direct Selling Association (DSA) recently armed member companies, as well as non-member companies, with strategies to respond to Federal Trade Commission
(FTC) rule changes that could reshape the industry landscape. In a tactical webinar detailing several options for reaching independent direct sellers, DSA leaders emphasized preparation—not immediate action—as they await possible publication of proposed regulations targeting direct selling companies.

Late in the administration of former President Joe Biden, the FTC released two Notices of Proposed Rulemaking (NPRM) and an Advance Notice of Proposed Rulemaking (ANPR) specifically targeting direct sellers. These proposals include a new Earnings Claim Rule directed at direct selling companies and amendments to the existing Business Opportunity Rule.

If implemented, the proposed Earnings Claim Rule would prohibit misleading earnings representations, require substantiation for any income claims, mandate record-keeping and prevent misrepresentation of direct selling opportunities as employment positions. 

Meanwhile, the expanded Business Opportunity Rule (renamed the “Business and Money-Making Opportunity Rule”) would extend coverage to include business coaching and other money-making opportunities, though direct sellers would be exempt from this rule.

A supplemental ANPR explores additional requirements including mandatory earnings data disclosure to potential recruits, waiting periods before joining a direct selling company and prohibitions on non-disparagement agreements.

As DSA CEO Dave Grimaldi explained during the DSA-hosted webinar, “We are in a waiting room. They [the rules] have not been published in the Federal Register, which is the starting gun.” Publication would officially start the 60-day public comment period, but the Trump administration’s regulatory freeze has temporarily halted the rules’ progression. 

Red Flags for the Industry

Alex Kennedy, vice president of legal and government affairs at USANA Health Sciences and DSA Government Relations Committee chair, didn’t mince words about the industry’s concerns.

“These rules are long, and they’ve got a lot in them. One of the rules is over 150 pages long. Another one is about 50 pages, just chock full of stuff, almost none of which is good for us,” Kennedy said.

Among the provisions deemed troubling by DSA: expanded FTC authority to levy monetary fines without what the industry views as adequate due process; requirements for “unfavorable earnings claim information” to potential recruits; nationwide cooling-off periods before joining an MLM; waiting periods before new distributors can purchase products; additional earnings claim regulations; and bans on non-disclosure agreements with field representatives.

Two-Track Response Plan

The webinar outlined the DSA’s dual approach to address the potential rule changes:

First, the association has launched a congressional outreach campaign. “We have been for the last month meeting with senators’ offices and those of the members of the House of Representatives to flag for them and to give them the watchouts to what could happen to the economics of the channel should these rules go forward,” Grimaldi told attendees. These efforts target members of both the Senate and House Commerce Committees, which oversee the FTC.

Second—and only if the rules are published—the DSA plans to mobilize direct selling field representatives to flood the FTC with public comments. John Webb, senior legal counsel for the DSA, reminded participants of past success: “In the early 2000s our industry defeated a nasty proposed rule aimed at our industry, among others, by submitting 18,000 letters to the FTC in opposition to that rule.”

Kennedy set an ambitious benchmark: “We would love to see 50,000 to 60,000 letters submitted. We think that’s a reachable goal.”

Ready-to-Launch Campaign

Kirsten Aguilar, executive vice president of marketing at SeneGence, walked attendees through the infrastructure created to facilitate this response. DSA has developed a bilingual campaign with three options for companies:

• Direct representatives to a general industry landing page at WeAreDirectSelling.com 
• Embed code for a comment page on their own websites
• Use custom URLs with company branding and logos

“We’re offering a ready-to-go packaged-up campaign,” Aguilar explained. “The toolkit is going to include all kinds of goodies. Social media artwork and copy that will be very easy for you to use in whole or in part.”

The toolkit includes social media assets, targeted copy, PowerPoint slides, newsletter content, blog copy and scripts for internal use in meetings and videos. Companies can sign up to receive these materials at https://www.dsa.org/we-are-direct-selling/toolkit-request or through a QR code, which was provided during the webinar.

Messaging: Pride, Not Panic

Presenters emphasized that companies should frame this campaign positively when the time comes.

Aguilar suggested using this campaign as an opportunity to build industry pride and togetherness: “I think there’s a great opportunity here to empower your field to really get involved and understand not only what this initiative means but what our industry represents as a whole. This is a good opportunity to create industry pride and to work together.”

Crayton Webb, CEO and owner of Sunwest Communications, highlighted the minimal time investment required: “This will take two minutes when you activate them. And we want to accentuate and empower you to accentuate just how easy this campaign is.”

Uncertain Future

The fate of all three notices is even more uncertain following recent developments at the FTC. The regulatory landscape shifted dramatically when President Donald Trump fired both Democratic commissioners, Alvaro Bedoya and Rebecca Kelly Slaughter, leaving the Commission with only Republican members. This follows the January resignation of former FTC Chair Lina Khan, who had championed the proposed rules during the Biden administration.

The Commission is now led by Chairman Andrew Ferguson, who voted against all three proposals when they were initially announced. In his dissenting statement, Ferguson made clear his position that whether the proposed rules “are lawful, and whether they are prudent and sound policy choices, are decisions that belong to the incoming Trump Administration.”

With Republicans now in full control of the Commission, the direct selling industry may face a more favorable regulatory environment. Legal challenges to the firings have been initiated, as both dismissed commissioners have filed a lawsuit against the administration, calling their removal “illegal” and citing a 1935 Supreme Court precedent that limits the president’s authority to remove FTC commissioners.

If the notices are published in the Federal Register despite these developments, stakeholders would still have 60 days to provide comments. The FTC would be proceeding with its “Mag-Moss” rulemaking authority, which entails several steps and hurdles but would ultimately grant the agency expanded powers to impose monetary penalties against direct selling companies found in violation of the new rules. 

This is precisely why DSA and member companies are concerned—the rules would give the FTC additional enforcement tools to seek financial damages from companies the agency deems non-compliant.

Industry Unity

A recurring theme throughout the webinar was the power of industry unity. Grimaldi drew parallels to his experience in the blockchain and cryptocurrency industry: “We were a mobilized and uniform family fighting for an industry that had a very bad and continued to have a bad perception in Washington. We took it personally. It brought us together, and it made us stronger, and we wanted to protect each other, so we moved in lockstep.”

DSA emphasized that while its lobbying efforts are important, lawmakers and regulators are most influenced by hearing directly from voters. “Congress, they really don’t care as much about what corporations think,” Kennedy noted. “What they care about is what voters in their district think.”

In a comment to SSN about the mobilization effort, Kim Drabik, vice president of corporate affairs at Plexus Worldwide, emphasized the unique strength of direct selling’s grassroots approach.

“Grassroots advocacy, when powered by independent entrepreneurs and the people surrounding them, is a powerful tool in defending against regulatory overreach,” she said. “These entrepreneurs, small business owners, and distributors pay taxes, support local businesses, dine at nearby restaurants, and invest in their communities. 

“This includes hundreds of thousands of Plexus Brand Ambassadors across the U.S. It’s not just about raising our voices—it’s about leveraging the strength of real-world experiences and the collective will of those who understand direct selling and ensuring our future is shaped by those who live it every day.”

DSA has received great interest in using the campaign materials in a variety of ways if the rules are published in the future. Companies that are not DSA members, including Total Life Changes and Ambit, have requested custom, company-branded websites and have accessed the DSA-designed toolkit. Total requests for toolkit access are at 20 and rising.

Prepare Now, Act Later

Throughout the webinar, speakers repeatedly emphasized the need for preparation without premature action.

“DSA is not saying go. The green light isn’t on. We are preparing,” Crayton Webb emphasized. “The goal here is to do the preliminary work so that the infrastructure is in place to create a groundswell of responses through DSA’s WeAreDirectSelling.com advocacy platform.”

Aguilar reinforced this approach: “We are still in preparation mode here, and we still don’t know exactly when, but we want everybody to be ready so we don’t face that scramble should the rules get published down the line.”

Kennedy summarized, “We’re hoping for the best, preparing for the worst.” 

The direct selling industry now awaits the potential publication of these rules in the Federal Register, with DSA promising to provide updates and activate the coordinated response strategy only if and when the regulatory process moves forward.

As John Webb explained regarding future implementation: “This needs to go out to everybody and anybody with an interest in supporting the direct selling industry and independent direct sellers. Your employees, distributors, and anyone your brand touches can send comments with one click. Mobilize your salesforce with the easy one-click campaign. We’re going to make this so easy that it’s not going to be a distraction.”