Industry News

Deciphering DSHEA:
Education, Enforcement
and the Internet
by Nancy Laichas

In 1994, the U.S. Congress enacted the Dietary Supplement Health and Education Act (DSHEA) in an effort to ensure that consumers have access to health-related information about nutritional supplements. In its findings, Congress stated that improving the health status of U.S. citizens ranked at the top of the national priorities of the federal government and said, "There is a growing need for emphasis on the dissemination of information linking nutrition and long-term good health."

Fast-forward 10 years. The U.S. nutrition industry grew to more than $75 billion by 2005, with more than $6 billion of that generated by direct selling companies-and the ability of direct sellers to educate their consumers about their products is a cornerstone of that success. "Companies that use DSHEA are bringing out innovative, new [nutritional supplement] technologies that everybody doesn't already know about," says Mannatech Founder and CEO Sam Caster. "If everybody already knows about it, then you don't need to educate them. How many people don't know that vitamins and minerals are important? Probably not a lot, that's why we sell them at Wal-Mart. What they may need to know is the quality issue between synthetic vitamins and those in natural complexes. Our industry is great at bringing that kind of information to the marketplace."

But DSHEA provisions that set standards for what companies and their distributors can and cannot say about their products are not always crystal clear. "How does a company establish itself as DSHEA-compliant, disperse the right type of information and educate its associate base on how to utilize that appropriately?" Caster asks.

It's All about Education

For Mannatech and other companies marketing dietary supplements, the key is education-educating distributors about how to educate consumers in a way that complies with the Third Party Labeling Exemption (TPLE) to DSHEA, which mandates that materials describing the benefits of supplements must be educational, not promotional.

"Many of the problems companies come up against stem from distributors not understanding the difference between educational and promotional material," says Spencer Reese, a partner in the law firm Grimes & Reese, which works with many direct selling companies. "Their job is to get out there and sell, so they're going to use anything they can get their hands on for selling purposes. The problem arises when distributors don't understand the limits on what they can use the material for."

At USANA, a Utah-based marketer of nutritional supplements, a team constantly monitors literature, articles and studies to determine if all TPLE criteria are met before making such material available to distributors and customers. But most important, USANA makes sure its distributors understand the rules. "We have a well-trained staff and there's always someone here to answer questions for a distributor," says USANA Vice President and General Counsel James Bramble. "We do conference calls, and our compliance department has a presence at all of our major meetings and events to provide training." USANA even requires its leaders to complete intensive compliance training once they reach a certain leadership rank. "They get certified so they understand the rules," Bramble says. "These are the leaders putting on meetings across the country, so we want to make sure that if they're onstage, they're especially well-trained."

Associate Counsel Jared Frei of XanGo, a Utah-based functional beverage marketer, says it's important for companies to take a proactive approach in helping distributors understand what materials are compliant. "At our recent convention we offered three separate blocks of training on compliance, and what third-party material is and how to use it properly," he says. "It's very important that we actively educate."

XanGo also created a DVD, Speak Up: How to Share Your XanGo Experience, which it includes in its distributor kit. "We put this out last fall, and it's been a key tool for distributors to see actual examples of what they can and can't say," says XanGo Manager of Public Relations Alexandra Bowman.

Internet Interpretation

Because DSHEA was enacted in 1994, well before the Internet became a widely used source of information, there's little in the statute that speaks specifically to issues that arise in cyberspace. The TPLE says that educational material may be used in connection with the sale of a dietary supplement when it "does not have appended to it any information by sticker or any other method." How this applies to a Web site is subject to much debate, but Spencer Reese says applying TPLE to the Internet requires best practices and common sense.

"If I have a book that is promoting benefits of vitamin C, but then Jim and Suzy put their sticker on it, then that sticker has transformed that book into promotional material instead of informational material," Reese says. "It might seem arbitrary that Jim and Suzy can give out a book along with the sale vitamin C, but the minute they put a sticker on it, it becomes labeling and not within the TPLE. Those are the lines.

"The same principles apply in an Internet context," Reese says. "If a Web site promotes benefits of vitamin C, then we don't want to jeopardize the third-party exemption status by linking that site to Jim and Suzy's Web site that promotes the sale of their vitamin C."

The first thing Mannatech did after DSHEA was enacted, says Sam Caster, was to develop a Web site specifically designed to provide educational materials to consumers in a responsible way. At www.glycoscience.org, the Web site maintained by Mannatech's Research and Development Department, distributors, consumers and healthcare practitioners can find a wealth of material on the glyconutritionals that form the scientific underpinnings for Mannatech's product line. "This site is where we published all the data we discovered: case studies, retrospective studies and prospective studies," Caster says. "Not only did we publish the abstracts, we link them back to the full published articles on MedLine [a database maintained by the National Library of Medicine]. So if healthcare practitioners see an abstract or a consolidated benefits paper and want to know where the real paper is, they can just punch it in on our Web site and go straight to MedLine."

XanGo is in the process of developing an online database of third-party material. "We will be putting a library on our Web site that distributors can link to that contains bona fide third-party literature," Frei says. "Distributors will see how the appropriate separation will apply in an Internet-based system." For now, Frei says, "Distributors have to submit their Web sites to the company for approval before they can advertise XanGo's product or business opportunity. And we don't allow distributors to link to third-party material."

Enforcement-The Other Side of Education

No matter how much time, effort and money companies spend educating their distributors in the fine points of DSHEA and the TPLE, violations do occur; and it's in the best interests of companies to take action quickly and firmly. "Always investigate anytime there is an allegation," Bramble says. "At USANA, less serious violations get education and a warning. More serious violations may result in fines, or even termination, if we believe the distributor is not going to promote the business in an ethical way."

Sam Caster says the Internet is where most information gets dispersed inappropriately, and Mannatech uses surveillance software to monitor cyberspace for violations. "It does a 24-hour-a-day surveillance on everything that mentions our name and the names of our products," he says. "Anything on a Web site, anywhere in the world, comes back to us. Then we can look at it and see if it's appropriate."

At XanGo, says Frei, compliance is an important part of doing business. "We have rogue groups from time to time that create a problem for our industry," he says. "Recently we had a situation where there was some third-party material that was problematic in the claims that were made, so we sent out an e-mail blast to distributors asking them not to use this particular material because of its inappropriateness.

"If you have a great product, you don't need to make misrepresentations or use any inappropriate material to further your business," Frei says. "So we are always thinking of ways we can help our distributors, because if we don't educate them, there's an informational vacuum."

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