FTC attorney Paul Brown reviews the importance of income disclosures in direct selling and multi-level marketing companies.
An earnings claim is a statement made by a company or its representative about the income an individual can earn from a business opportunity. The FTC requires any claims that are earning be presented in writing; any claims not supported by written documents are illegal. According to Mr.Brown, the Getting Claims Statement must contain:
The name of the individual making the claim and the date
The details of the claim
The beginning and ending date those gains were attained
The amount and percentage of your buyers who got
Any information about the buyers who got those results which may vary from would-be buyers – for example, where they’re located
If they ask for it a statement that would-be buyers can get written proof for your gains promises,
Brown talked about how the FTC examines earnings claims to determine whether they comply with the rule. For example, Brown said that claims are regarded by consumers as representing an average, not a high. The consumer still expects to make the claimed sum even if the gains claimed are not guaranteed. Testimonials can also cause the consumer to infer particular results. Consumers, she said, will require the testimonial as a normal experience, not a particular case.
In addition, substantiation is essential when making claims. You can’t make a claim and try to support it afterwards. The supporting data must accompany the claim as part of the accompanying Earnings Claim Statement.
Brown additionally stressed the notion the impression you create is as important as the particular advice you provide. Under the law, deception by implication is not legal, also. Therefore, you should present the facts of the claim clearly and in context, you have to substantiate the claim in writing, and the claim must represent typical, not unique, results.
One additional, and very important, item to remember is that a business is responsible for the statements. Independent Distributor status doesn’t protect a business, Brown said, noting a substantial amount of case law supports this position.