Q&A with Direct Selling Self-Regulatory Council Director Peter Marinello
Momentum Factor Founder & CEO Jonathan Gilliam recently interviewed Peter Marinello, Executive Director of the Direct Selling Self-Regulatory Council (DSSRC) to learn how the program will impact the compliance function of direct sellers. If you aren’t familiar with this new agency, it’s time to learn as enforcement begins in earnest on April 1. Created by the DSA and impacting ALL direct sales companies, the Council is a game-changer in the way companies and representatives in the channel market themselves.
“A major component of the program will be monitoring of social media and internet channels for improper claims. If you don’t already have a robust compliance program in place, give us a call.” ~JG
JG: Please explain the purpose of the DSSRC.
PM: The purpose of the program is to provide independent, impartial and comprehensive monitoring of direct selling companies on an industry-wide basis; address income representations (including lifestyle claims) and product claims by companies and salesforce members, and enhance the reputation of direct selling and elevate confidence in DSA members.
JG: Is the DSSRC only monitoring online activity?
PM: No. While primary focus of the program is to review claims made on various social media platforms, the program will also encompass review of company websites and relevant broadcast and print advertising. This includes both express and implied claims as well as the adequacy and conspicuousness of the disclosure of information (or the omission thereof) used to qualify the claim(s).
JG: If a company is under investigation, what compliance processes would you like to see in place?
PM: While we certainly encourage companies to have certain internal compliance mechanisms in place, its not our place to dictate any specific compliance procedures to direct selling companies. Technology is advantageous with respect to widening the compliance “net” for direct selling companies. We would encourage that all product sales be adequately documented and that product claims be supported by a reasonable basis. Establishment claims (e.g., “clinically proven” claims) and health and safety claims should be supported by reliable and competent scientific evidence.
JG: What is the process to report a company?
PM: What requirements must be met to be considered a legitimate complaint? A challenger company must submit a complaint to the unit with documentation identifying all express and implied claims to be considered by DSSRC as well as a statement as to what income representations and/or product claims are at issue and how the claims do not comply with general advertising standards of truth and accuracy. The challenger’s submission must address claims related to one company only and shall be submitted together with a check payable to the Council of Better Business Bureaus, Inc. in the amount of $5,000 if the challenger is a DSA member company or $10,000 if the challenger is not a DSA member company. DSSRC will vet all complaints to make sure the allegations have merit and are not frivolous. Submissions may be provided by email with hard copy attachment along with copies of the advertising and/or social media posts that are at issue.
JG: Based on the types of violations/concerns DSSRC is monitoring for what is the best way a company can prepare for April 1?
PM: DSSRC will be focusing on product claims and earnings claims. Companies should be engaging with their compliance teams and make sure that company distributors are not disseminating unsupported product claims and earnings claims.
JG: What are the best practices to follow when a company receives a complaint from the DSSRC?
PM: Contact DSSRC as soon as possible after receipt of the documentation to indicate that you are in receipt of the inquiry and then begin the necessary due diligence of contacting the distributor (if that was the source of the claim(s) at issue) to get an understanding of the basis of the representation.
To learn more about compliance monitoring, read this white paper from Momentum Factor Founder & CEO Jonathan Gilliam.