Operation Income Illusion: A Positive Step by the FTC to Curb Deceptive Income Claims

Dec 23, 2020 by BBB National Programs

The Federal Trade Commission (FTC)’s December 14 Operation Income Illusion initiative is a crackdown by the FTC and 19 federal, state, and local law enforcement partners against the operators of work-from-home and employment scams, pyramid schemes, investment scams, bogus coaching courses, and other nefarious operations that purport to offer significant income opportunities but that end up costing consumers thousands of dollars.

In this effort, the FTC and its partners are opening new law enforcement actions that focus on scams targeting consumers with fake promises of income and financial independence that have no basis. 

The Direct Selling Self-Regulatory Council (DSSRC) has long cautioned direct selling companies about the dissemination of business opportunity claims that communicate unrealistic earnings claims. One of the greatest challenges for direct selling companies is ensuring that the earnings claims communicated by their salesforce members comply with legal and self-regulatory standards.

In fact, earlier this year the DSSRC published its Earnings Claims Guidance for the Direct Selling Industry, which was intended to reinforce the fundamental principles of advertising claim dissemination with a particular emphasis on earnings claims communicated in social media posts. 

In general, direct selling companies are encouraged to refrain from communicating any claims that can be construed as communicating that consumers and potential salesforce members can generally expect to earn anything beyond modest or supplemental income from the direct selling business opportunity. Since the release of this guidance, companies have been very receptive and the announcement by the FTC of Operation Income Illusion is consistent with this ongoing effort to ensure that income claims in the direct selling industry are communicated truthfully and accurately.

DSSRC remains concerned about the continued proliferation of exaggerated income claims and will continue to monitor the advertising messages of the direct selling industry to make sure they adhere to appropriate and ethical advertising standards. 

If you think you have found a false business opportunity claim in the direct selling industry, file a challenge with the DSSRC. 

Other Blog Articles

Blog

Schrems II: What Do Privacy Shield Businesses Need to Know?

The July 16 decision from the CJEU, known as Schrems II, addressed two mechanisms for transferring EU individuals’ personal data outside the EU. As the situation continues to develop, and before making changes to their practices around international data transfers, businesses should pause to review their data flows, contracts, and substantive commitments, and their current chain of compliance and accountability for data received from the EU.
Read more
Blog

FTC Stats On NAD Referrals

Brands have been challenging the truthfulness of competing advertising campaigns for nearly 50 years at the Better Business Bureau’s National Advertising Division, a voluntary self-regulatory system put in place by the advertising industry to increase consumer trust in advertising.
Read more
Blog

Champions for Truth in Advertising

Today, the National Advertising Division (NAD) continues to carry the torch for truth-in-advertising. As the advertising landscape has evolved over the last 50 years, NAD has continued to adapt to new products, new industries, and new advertising media. Laura Brett, Vice President of NAD, and New York Office Lead for BBB National Programs discusses truth-in-advertising trends, hot topics, and issues that lie ahead.
Read more
Blog

Status Update on Transatlantic Data Transfers: Building Bridges Takes Time

As 2020 draws to a close it is a good time to reflect on learnings about the future of authorized transatlantic data transfer mechanisms. In light of Brexit and continuing developments surrounding Schrems II, we discuss what the structure of the current Privacy Shield Framework can teach us much about what future commercial transfer mechanisms are likely to look like, as well as what businesses can do to shore up their compliance efforts.
Read more