Use of a Disclaimer on Income Claims:
In order to comply with legal and self-regulatory standards as required by Section 8 of the Direct Selling Association’s (DSA) Code of Ethics, the Federal Trade Commission’s (FTC) Disclosures Guide, and the FTC Guides Concerning the use of Endorsements and Testimonials in Advertising, Section 8.3.3 – Income Claims, of the LifeVantage Distributor Policies and Procedures, requires “that all LifeVantage Distributors are fully informed and have realistic expectations concerning the income opportunity associated with being a LifeVantage Distributor.” Accordingly, LifeVantage Distributors may only make such income claims, specific or implied, if the following conditions are met: “1) The information must be accurate and not misleading; 2) The information must be based on their experience and actual compensation level or be consistent with information in Company support materials; and, 3) The LifeVantage Distributor provides each person in attendance with a copy of the applicable LifeVantage Income Disclosure Statement.”
Question: What is the correct method and time to use the LifeVantage Average Annual Earnings Disclosure (AED), and are there other disclosures that need to be made, in specific situations, for each distributor to be accurate and complete in their representations?
With respect to any earnings testimonial, if there is no substantiation that the experience of the individual making the claim is representative of what the audience will generally expect to achieve, the advertisement (e.g., social media post) should disclose the generally expected results in the depicted circumstance. In these instances, the distributor must show the LifeVantage Average Annual Earnings Disclosure (AED) – clearly and conspicuously! (Prominence [big enough], placement [not buried], proximity [close to], presentation [easy to understand]): Average Annual Earnings Disclosure
Use of a hyperlink: A hyperlink to the Income Disclosure Statement can be used to complement the disclosure of generally expected results and provide additional context to the testimonial. However, it must be used in a clear and conspicuous fashion to avoid deception and the hiding of the substantiation behind the link.
Other necessary disclosures include the “Generally Expected Earnings (Average Annual Income of all LifeVantage Distributors)” and the “Success Disclaimer,” cited below:
When posts reference atypical distributor earnings, the “generally expected earnings (Average Annual Income of all LifeVantage Distributors) “In 2020, the typical income earned by a LifeVantage Distributor was $1,700” must be included in a clear and conspicuous fashion.
The Success Disclaimer should be posted at the beginning of any presentation of the LifeVantage Compensation Plan or when referencing the income potential of LifeVantage:
Success Disclaimer – The Distributor sales earnings disclosed are potential gross earnings and not net of other business expenses and not necessarily representative of the actual income, if any, that a Distributor can or will earn through the LifeVantage Sales Compensation Plan. A Distributor’s earnings will depend on individual diligence, work effort and market conditions. LifeVantage does not guarantee any income or rank success. See the Average Annual Earnings Disclosure for detailed earnings information per rank.
Lastly, when claims appear extraordinary and incapable of being qualified with an appropriate disclosure, to be determined on a case-by-case basis, it is prohibited. “The Earning potential is truly limitless” is an example of a non-compliant claim.