Washington, D.C. (April 17, 2014) — As part of an ongoing program to foster mutually beneficial relationships between the Direct Selling Association (DSA) and regulatory agencies, DSA members recently had the opportunity to learn more about the Federal Trade Commission’s (FTC) perspective on deceptive representations as they relate to earnings claims. On March 14, FTC Attorney Janice Kopec was a featured speaker during DSA’s semi-annual Code Responsibility Officer (CRO) conference call. Each member company must appoint one executive to serve as CRO and oversee the administration of the DSA Code of Ethics within that company. These semi-annual conference calls deliver information to member companies about new or updated provisions of the Code, and provide an opportunity to discuss policy and regulatory issues of importance to direct sellers.
Ms. Kopec’s presentation focused on earnings claims, which are statements a company (or its field members) may make about the amount of income an individual can generate from involvement in a business opportunity.
“We have been fortunate over the years to have a constructive relationship with the Federal Trade Commission,” DSA President Joseph Mariano stated as he introduced Kopec. “We're happy to foster continued dialogue with the FTC and better familiarize it with our industry. This is another example of the continuing dialogue in which we're engaging.”
The presentation outlined the definition of an earnings claim and the lens through which the FTC examines them.
“Consumers regard claims as being the average experience,” Kopec described. “Even if the ad didn’t guarantee the earnings, they expect they’ll earn the promised amount. Sometimes there’s confusion with testimonials of specific instances. Consumers will think that’s a typical experience.”
It was noted that substantiation plays a critical role in evaluating claims and that companies are required to substantiate at the time of making claims, rather than making a claim and then gathering the data to support it later.
“DSA welcomes these important interactions with regulators and legislators,” said Mariano. “It’s important for us to gain a perspective on the work they are doing, and it’s equally as important for them to experience first-hand the high priority DSA member companies place on consumer protection.”
About the Direct Selling Association
DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Among its more than 240 active and pending members are companies selling both via a party-plan method and in the traditional person-to-person style. In 2012, U.S. direct sales were more than $31.6 billion with nearly 16 million direct sellers nationwide. The vast majority are independent business people—micro-entrepreneurs—whose purpose is to sell the product/service of the company they voluntarily choose to represent. Approximately 90 percent of direct sellers operate their business part time.
The cornerstone of the Association's commitment to ethical business practices and consumer service is its Code of Ethics. Every member company pledges to abide by the Code's standards and procedures as a condition of admission and continuing membership in the Association.
For more information on direct selling, DSA and its Code of Ethics, please visit DSA’s website, www.dsa.org.
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