Now there’s a headline you don’t see every day. But that’s exactly what The Hill wrote after attending the DSEF-sponsored event at the National Press Club: Consumer Protection: A Multi-Industry Conversation on Ethics & Self-Regulation.
FTC Commissioner Maureen Ohlhausen had this to say: “I commend you for your partnership with [Council of Better Business Bureaus] that has increased awareness and understanding – and appreciation – of the importance that the direct selling industry places as an industry on ensuring it is an ethical and trustworthy marketplace.”
She went on to say that sometimes self-regulation is “the only option for certain advertising practices where government intervention is limited by First Amendment concerns.”
It’s interesting that she should bring up the First Amendment, since that seems to be such a gray area when it comes to direct selling, particularly around health claims. Your favorite MLM supplement may have actually cured your cold, your cramps, or your cancer. But you can’t say that, because your testimonial is an advertisement, since you’re marketing the product, and people might get the wrong idea that those results are typical. If you don’t mention the specific product, though, now it’s not an advertisement — it’s free speech, and you can tell your story.
It’s understandable why people are confused.
Also, I think it’s a bit of a misnomer to call what the direct selling industry is doing “self-regulation”. There actually are regulations from the FTC, and they’re very, very detailed and specific. They just don’t have the manpower to proactively enforce them on a massive scale, so they wait until they have some larger cases they can make examples of and go after those. That leaves the industry needing to monitor — not regulate — itself as a risk management strategy. And with the larger cases costing companies millions of dollars, or even wiping out the business, they tend to err on the side of being overly cautious. Most companies’ policies and procedures are actually more stringent than the FTC requirements because they’re playing it safe. The challenge, of course, is how to actually monitor and enforce those policies with millions of independent direct sellers worldwide.
Like herding cats.