Frequently Asked Questions: Penalty Offense Authority Letters

Nov 23, 2021
By DSJ Staff

On October 26, 2021, the Federal Trade Commission (FTC) sent 1,100 letters to businesses across the United States. Almost every DSA member and many non-member direct selling companies received the letter.

The letters were not sent exclusively to direct selling companies. Franchises, gig companies, and other companies offering business opportunities also received letters.

DSA will continue to monitor and engage any forthcoming action on these letters with companies and the FTC.


On November 12, 2021, DSA hosted a webinar on the impact and implications of the letters. DSA members can access the webinar on the DSA website.

DSA also answered some frequently asked questions about the letters.

Why Did the FTC Do This?

The power of the FTC to collect monetary damages was recently called into question by the United States Supreme Court. The Commission has looked to deploy a broader set of tools, including many that have been dormant for decades, to increase the agency’s effectiveness.

Is My Company Under Investigation by the FTC?

No. As the FTC makes clear in the letters, this is not a determination of wrongdoing. Rather, it puts a business on notice that they should be aware of what constitutes unlawful conduct.

Is This New Law or Guidance?

Although many of the cases mentioned in the letter may seem unfamiliar to you, this is not new law. The Direct Selling Self-Regulatory Council (DSSRC) released Guidance on Earnings Claims for companies that is a great resource and should continue being followed.

Is a Violation Automatically Subject to Fines or Actions?

No. The letters were a first step in a long process. The FTC would have to allege a violation, issue a final cease-and-desist order after an administrative hearing, and then determine that a business, with actual knowledge, violated the cease-and-desist order.

What Should I Do Now?

Double-down on compliance and education efforts within your company and your salesforce. Demonstrate that these actions have increased since receiving the letter, and document all of your compliance efforts if you have not been doing so up to this point.

  • DSA Briefs
  • November 2021