Unresolved income and health claims lead to FTC referrals
By: SSN Staff
The Direct Selling Self-Regulatory Council (DSSRC), in its fourth year of operation, is concluding another productive and busy year monitoring the U.S. direct selling channel.
Founded by the Direct Selling Association (DSA) and administered by BBB National Programs, the DSSRC serves as an independent non-profit organization tasked with providing mechanisms for the oversight and self-regulation of direct selling companies across the country.
While the DSSRC prides itself on working with companies to resolve the majority of problematic issues it finds, the council has so far this year escalated five cases to the Federal Trade Commission (FTC) after the requested actions were not taken or ignored.
BE Rules, also known as BE Factor and formerly known as Melius, is a cryptocurrency and foreign exchange network marketing company based in Dubai, United Arab Emirates.
The DSSRC reports that Melius offered several trading package subscriptions from 2018 to 2020 prior to the company being rebranded as BE Factor around June 2020.
A DSSRC inquiry was initiated in November 2021 concerning income claims made by the company and its representatives. The council made attempts to notify BE Rules that it was concerned by the company’s earnings claims, including promises of “financial freedom,” “easy profits” and “you will be rich.” The council also noted that the company website falsely implied that it is a member of the DSA.
After receiving no replies to the DSSRC’s multiple email Notices of Inquiry, BE Rules was referred to the FTC and the case was closed in January 2022. However, the DSSRC tells SSN that the FTC subsequently referred the case back to the council, at which time BE Rules was able to satisfactorily resolve its issues with the DSSRC.
Founded in 2014 and headquartered in Poland, FutureNet Inc. is a multilevel-marketing company offering online platforms and networking services including travel discounts, skills training, and cryptocurrency programs.
The DSSRC initiated earnings claims inquiries in January 2022 in response to salesforce members disseminating deceptive earnings claims, including images of bank account balances over $300,000 and a monthly payout of $50,000. Company representatives made social media posts promising “full-time income on part-time effort” and “astronomical income levels.”
FutureNet Inc. failed to respond to the council’s inquiry and was referred to the FTC in March 2022.
Located in Santa Clara, California, Vyvo Inc. is a network marketing company that markets DNA and genetic testing, nutritional supplements, as well as a smart watch. The DSSRC commenced an inquiry after the company and its representatives made “aggressive” earnings claims, including life-changing income, passive income and financial freedom.
The council reports that, similar to several of the other companies being referred to the U.S. government, little contact information for Vyvo was provided on the company’s website.
A Notice of Inquiry was mailed to Vyvo in June 2022. Copies of correspondence were also emailed to the company. After failing to respond to the DSSRC inquiries, Vyvo was referred to the FTC and the case was closed in August 2022.
Fifth Avenue Collection
Fifth Avenue Collection Inc. is a fashion jewelry direct seller that is headquartered in Saskatchewan, Canada. The company caught the attention of the DSSRC after salesforce members posted earnings claims on social media, including posts promising up to $800 per month in income and that every day could be a payday.
The council sent email and hard copy Notices of Inquiry to the training and marketing development director at the company’s Georgia offices in June 2022 and followed up with another Notice to the company president on Sept. 7, 2022. After receiving no response from Fifth Avenue Collection, the DSSRC referred them to the FTC and closed the case on Sept. 29, 2022.
In its most recent government referral, the DSSRC highlighted misleading product health claims made by Tennessee-based health and wellness direct seller Root Wellness LLC.
The council first initiated an inquiry in February 2021 in regards to claims made by Root Wellness and its salesforce members suggesting that Root Wellness products could treat serious health-related conditions such as psoriasis, fibromyalgia, and rheumatoid arthritis.
The DSSRC reports that Root Wellness provided several published studies in an attempt to back up its claims. However, the Council concluded that the articles did not provide the necessary evidence to support the claims. At that time, Root Wellness issued a company statement declaring that it had removed problematic pages from its website and was working to educate representatives about compliance.
On March 18, 2022, the council conducted a compliance inquiry with Root Wellness and was told that all of the social media posts in question were removed. However, the DSSRC established that at least four such social media posts were still publicly accessible at that time. The council subsequently reported that 24 of the 29 social media posts highlighted in the 2021 and 2022 inquiries remain publicly accessible.
Further complicating the matter, the DSSRC became aware of several press releases Root Wellness issued from a distribution service stating that the company received high-trust ratings from several independent trade organizations. The DSA and BBB logos were also used in the press releases despite the fact that Root Wellness is not an accredited business with the BBB nor a member of the DSA.
The DSSRC referred Root Wellness to the FTC in October 2022.
Peter Marinello, Vice President of the DSSRC, BBB National Programs, tells SSN: “Government referrals are a pivotal component of the independent, industry self-regulatory process.
“The Direct Selling Self-Regulatory Council calls on government agencies in receipt of these referrals, such as the Federal Trade Commission, to exercise their enforcement authority.
“In doing so, these agencies send a strong message to direct selling companies that failure to address false and deceptive earnings and product claims disseminated by the company or its salesforce members will result in significant consequences.”
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