What happened when we reported an MLM to the ASA? (And how things have thankfully changed since)
How can you report ethical behaviour by an MLM rep if you are in the UK? Find out what happened when we attempted to do so to the Advertising Standards Authority.
Over the weekend I was invited for an interview by The Recovering Hunbot to discuss how authorities in the UK regulated the MLM industry.
And when considering what advice or experiences I could offer, I was reminded of the time when I tried to report a Forever Living rep for making a health claim about a product to the Advertising Standards Authority (ASA).
The experience at the time was depressing, and sadly illustrative of the frustrations of reporting MLM health and income claims to regulatory bodies who do not understand how the industry works (and in my case refused to even try to understand).
Not only did the person I reported to at the time take no action, but they also offered no advice on who was responsible for investigating unethical health claims, despite repeated requests.
Thankfully, it appears that things have since changed at the ASA and they are now much more aware of how MLMs operate. Read on to find out what happened when I reported a health claim by an MLM rep in 2019, and what stance the ASA takes now on MLMs.
What happened when I reported an MLM rep to the ASA
Here’s a copy of my full exchange with the ASA. Please note that I have edited the exchange to remove any identifying mentions of the MLM rep involved, including their LTD company details, which I shared with the ASA to demonstrate they were promoting the products on a commercial basis for financial gain.
This was my original message to the ASA:
A Forever Living Business Owner who is currently going through chemotherapy promoted the company’s aloe vera gel drink on their Instagram stories, claiming it must have been responsible for not losing their hair, and that it helps with the side effects of chemo due to the vitamins, trace elements etc that it contains.
They then asked people to message them for more information. I have a recording of the Facebook story but it won’t allow me to upload the file, so I have uploaded a screenshot showing them claiming that “aloe contributes to boosting your immune system which for me is vital whilst on chemo”. Happy to share the recording.
The ASA replied by asking me to send them a copy of the video and a link to the company, which I did. I was surprised then to receive this reply from them:
Thank you for contacting the Advertising Standards Authority (ASA) with your complaint about Instagram content.
I understand from your complaint that you were concerned that the content made unauthorised health claims for an Aloe Vera product.
On this occasion we will not be proceeding with any action under the Advertising Code. Please see below for further information.
As a non-statutory regulator, our powers are limited to assessing matters concerning the content of advertising which, for our purposes, has a specific definition.
In this instance we are satisfied that the post was not an ad, but editorial content and as such its content is not required to comply with the Advertising Rules.
Thank you for contacting us with your concerns.
I was very concerned that the ASA clearly did not understand the nature of MLMs, as this absolutely was not ‘editorial content’ but clearly sales content. Here is my response:
I appreciate your remit in the ASA is limited, but if possible it may be worth revising/extending this at some point to allow for the way in which social media is being used by influencers.
Representatives of multi-level marketing companies like Forever Living use social media to advertise and sell their products. They consider it a marketing strategy, and as far as they are concerned this is certainly an ad.
If this doesn’t fall under the ASA, and never would, can you advise me who I can forward it to? There are many claims made like this that are duping people into buying with false (and sometimes dangerous) health claims.
This was their response, further demonstrating that this person did not understand MLMs on any level:
In this case a user of Instagram purchased a product and made a claim about it they believe.
This type of communication is not regulated and is protected under the freedom of speech provisions in the Human Rights Act 1998.
By way of analogy, people are permitted buy Nike trainers and share that they believe they make them run faster and so on.
As an advertising regulator we it would be neither desirable nor possible for us to regulate this type of communication.
Thank you for sharing your view.
In an attempt to educate this person, I responded with the following message (as mentioned above, I provided details of the MLM rep’s Ltd company, proving they were commercially involved with the company):
Thank you for your quick reply. I understand your analogy, however, this isn’t a user of a product making a claim. This is a business (this person sells via a Ltd company) and they are a self-employed vendor working under a contract for Forever Living Products – the manufacturer. They are encouraging people to purchase via their account with the company for commission and bonuses.
If the ASA doesn’t cover these types of advertisements, can you please advise me who I need to contact?
Incredibly, this was how they responded:
Thank you for your email. On the information we have we do not consider that the communication is connected with the sale or transfer of goods and as such we do not consider it to be advertising.
On looking further into the business you have provided details of we understand that this person is connected to the supply of business training, coaching and networking.
On further assessment, we understand from the information you’ve provided in your complaint that you have an interest in a business operating in the same sector as the advertiser, and as such we consider that you are direct competitors. Our policy for dealing with complaints between competing parties requires advertisers to make a complaint about their competitor to try to resolve it with them directly in the first instance. We believe this policy assists in resolving some complaints in a fair and prompt fashion, in the spirit of fair competition and with the minimum of formality and cost.
You do not appear to have contacted your competitor and therefore we will not take any complaint from you further at this stage. If you would like to pursue your complaint, we would ask you to take the following steps:
1. A competitor who wishes to make a complaint should raise their concerns with the advertiser, ideally by registered post, or by another means of communication which will guarantee swift receipt by the advertiser. The complaint must provide an appropriate degree of detail in relation to the claim and medium in which it appeared, together with the factual basis for the complaint.
2. The complaint should be signed by a suitably senior officer of the competitor complainant (e.g. CEO, Legal, Marketing or Regulatory Director) or by a person who has been identified to the ASA as having suitably delegated authority to take responsibility for the accuracy of the complaint. The complaint should be addressed to a senior officer or other appropriate contact of the advertiser.
3. If the complaint is about an online marketing communication, the competitor who complains should obtain a screenshot of the page or pages that relate to the complaint or otherwise secure a cached copy of the website.
4. The complainant should allow five working days for a substantive response. If, at the end of this period, the advertiser has not opened a substantive dialogue or the parties cannot reach an agreement, the complainant may then submit a complaint to us.
5. When submitting the complaint to the ASA, a copy of the registered letter (or other notification of the complaint sent to the advertiser) setting out the concerns should be submitted, with a copy of the complete response (if any) from the advertiser.
There may be rare occasions when a competitor complainant will have a good reason not to correspond with an advertiser. In these cases we retain the discretion to bypass this procedure, if we believe the complainant raises a potentially serious breach of the Advertising Code, or if there are other good reasons to believe that inter-party resolution of the complaint is not appropriate. If you consider that your complaint falls into this category and should not be subject to this policy, please tell us the reasons why and we’ll review your complaint once we’ve heard your arguments.
If, after having contacted the advertiser, you still wish to complain, the best way to do this is by re-submitting your complaint via website:www.asa.org.uk. You’ll be given an opportunity to upload correspondence with your competitor as well as other relevant information required to assess your complaint in a timely way.
Yes – they actually decided not to pursue my complaint any further because they decided that I was a ‘direct competitor’. Of an MLM rep selling aloe vera products??!! I have zero idea why or how they came to that grossly inaccurate (and, quite frankly, insulting) conclusion, and I made a formal complaint to the ASA about my experience.
Depressingly, this exchange demonstrates just how difficult it can be to get the authorities to even understand MLMs, let alone take action on clearly unethical and even potentially dangerous health claims.
What the ASA now says about MLMs
Thankfully it seems things have changed since our experience with the ASA in 2019. While researching their current stance on MLMs for this article, we discovered this new page on MLMs on the ASA website.
Here’s what they now say about MLMs and advertising:
MLM posts are advertising
Most MLM companies have individual sellers or representatives who advertise their products on social media, along with posting opportunities for others to join the company. Sellers are reminded that where they post content that falls within the remit of the Code, they will be considered the advertiser, and will be responsible for that content complying with the CAP Code. See also: Remit: Social Media.
MLM companies can sell a variety of goods and services, from beauty products to food supplements to party supplies, and sellers need to ensure that they hold evidence to substantiate any objective claims they make in their ads. See also Misleading Advertising.
However, there may be rules around particular products that also need to be adhered to. Sellers should ensure that they are aware of any rules surrounding the products they are selling, as they are responsible for their own ads.
Social media posts encouraging others to join an MLM are likely to be viewed as recruitment advertising by the ASA. These also need to follow specific rules. For instance, any earnings claims marketers make in their recruitment ads need to be representative of what the average person can earn. CAP understands that, generally, those partaking in MLM opportunities are likely to earn differing amounts, and so would advise against quoting any direct figures in ads. Claims such as “you can earn a profit” are likely to be acceptable, provided the seller can prove that the average person can make some sort of “profit”.
Marketers should also ensure that they do not exaggerate the availability of any added incentives, such as holidays and cars.
Furthermore, sellers should also ensure that they include all material information in their ads – that is, all of the information someone would need to know in order to make an informed decision about whether to join the MLM themselves. This means making clear (for example) the nature of the opportunity, joining fees, starter kit fees, etc.
Any testimonials that are used in MLM ads are the responsibility of the seller – and the seller needs to hold documentary evidence that a testimonial or endorsement used in a marketing communication is genuine and hold contact details for the person who, or organisation that, gives it (rule 3.45). Furthermore, sellers need to hold evidence for any objective claims made in any testimonials, as they have adopted and incorporated the testimonial into their advertising. See our guidance on Testimonials and Endorsements for more information.
Promotions, giveaways & prize draws
Sellers are reminded that any promotions, including competitions, prize draws and giveaways, need to adhere to Section 8 of the CAP Code. For example, sellers need to ensure that they include all significant conditions for their promotion in the actual ad (such as a closing date, geographical or age restrictions, and how to enter). Any seller looking to run this kind of promotion on social media (or elsewhere) is encouraged to review our guidance on Prize Draws, Competitions and Promotional Marketing prior to marketing their promotion.
So if you do notice any social media posts or other claims from MLM reps that appear to fall foul of the ASA’s rules please do make a complaint to them here.
Should you report an MLM to the DSA?
Another organisation that claims to have a mission “to ensure the highest level of business ethics and service to Consumers” is the Direct Selling Association (DSA) in the UK.
However, as we cover here, the DSA is not a regulatory body but a for-profit business that appears to operate solely as a PR machine for their members. (Based on our experiences, we also believe that their Director General, Susannah Schofield, isn’t always truthful.)
We have made the DSA aware many times of unethical health and income claims made by representatives of their member companies, and they have appeared to take little-to-no action on them.
Indeed, the people we have highlighted to the DSA as repeat offenders continue to make claims such as this one, made last week in a video on Facebook:
“If you just do your job, do what I show you what to do, you’re going to earn a great amount of money.”
The DSA and Forever Living are aware that people are making claims like this, because we have informed the DSA and they say they have forwarded them on, and yet these claims persist.
However, we still believe there is value in reporting unethical behaviour by DSA member companies and their reps to the DSA. They may not take action but they cannot claim to be blind to what is happening in the industry if people continually alert them.
We also recommend speaking up in public if you experience or see poor behaviour. Over the past few years there has been a growth in media coverage of MLMs and in people speaking out on social media. This has helped educate people and given them the confidence to say ‘no’ when asked to buy from or join an MLM, and to share their experiences with these companies.
In turn, this has helped to contribute to what seems to be a decline of the MLM industry. And within a few years we hopefully won’t need authorities like the ASA to take action (or not in my case!) as there won’t be any MLM reps preying on the vulnerable.
If you see an ad or social media post from an MLM company or rep that you believe falls foul of the CAP Code (as described above) you can report it to the ASA here.
Photo by Fausto Sandoval