We are today contacting Multi-Level Marketing companies (MLMs) to instruct them that they must follow the ad rules after our proactive project found a high degree of non-compliance in this sector.
MLM is a way of selling goods and services where profit isn’t just made from the products themselves, but also the recruitment of new people into the company.
Although complaint numbers about MLM companies to the ASA have been relatively low, we carried out this project to ensure vulnerable consumers are protected at a time when the pandemic may have increased the numbers of people taking up these opportunities.
After monitoring 28 popular MLM companies on social media and reviewing their “recruitment” posts, we found numerous examples of misleading ads. Overall, we found problematic posts by over 67% of the companies monitored.
The misleading posts included exaggerated earnings claims, key information about the company being omitted and incentives offered that were unlikely to be attained by people joining the company.
To help ensure businesses follow the rules, we are sending the MLM companies we monitored a notice and a guidance pack to remind them and their individual sellers who promote their company that the claims in their ads must be objective and backed by evidence.
This includes all earnings claims, along with information about the nature of the job. If a company does not have the evidence to back up a claim, then they should not be making it.
Although our focus was on recruitment ads, due to the number of misleading product claims we saw, we have also created different fact sheets for three of the most popular and/or complex sectors we see advertised by MLMs – Beauty, Food and Cannabidiol (CBD).
We will continue to keep a watching brief over this sector and will take action against companies we have now contacted if we find future ads to be misleading.