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By Jared Blum, DSA Code Adminstrator
As guests in customers' homes, direct selling
representatives recognize their obligation to abide by the highest possible
standards of conduct. This concept is embodied in the Direct Selling
Association's Code of Ethics, one of the nation's oldest and most highly
regarded examples of consumer protection through industry self-regulation.
To ensure its effectiveness, the DSA Code of Ethics has been amended and increasingly promoted, positives for the industry as a whole. This year in particular, the Code and DSA's self-regulatory processes have been highlighted and enhanced both through an outreach program to state attorneys general and related consumer protection officials.
The DSA Code of Ethics, adopted in 1970 in response to marketplace and regulatory issues, was drafted primarily as a document to protect consumers. Since that time, several amendments have been added, which also help protect direct sellers while informing the public of their rights. In 1993, DSA amended the Code to require companies to repurchase all inventory and required purchases made within one year of termination at 90 percent of the original cost to the consultant. The purpose was to prevent past distributors from being left with unused inventory. In 2002, DSA added the "publication" requirement, in which all companies (both pending and active) must place either the DSA Code of Ethics or a link to the Code on their Web site. This requirement increases visibility of the Code, providing information about consumer and distributor rights to all Web site visitors. In particular, it informs the public about the DSA Code complaint process and gives them an avenue in which to voice their concerns.
So what has been the effect of these amendments? First, the buyback provision places DSA at the forefront of promoting consumer protection. This policy has helped keep former distributors from being left with excess inventory. Regarding the publication requirement, the effect could not have been more positive. In the first year after the Code was publicized, complaints increased by more than 100 percent; the next year, the number of complaints was slightly lower, but still almost 100 percent more than in previous years. You might ask, Why are more code complaints a good thing? The increase in complaints meant that the Code was being properly disseminated to those who may have been harmed. All in all, DSA member companies have been very responsive to this increase, and have gone out of their way to ensure the Code's provisions are respected.
The Code's amendments have been very successful in promoting high ethical business standards and strong consumer protection initiatives. So what's next? DSA is in the process of furthering its publication and enforcement of the Code, and I, as DSA's Code Administrator, will have a greater role in that process. It's important for this industry to explain publicly its self-regulatory processes, regarding both company policies and the DSA Code of Ethics. Toward this end, I recently spoke to members of the Republican Attorneys General Association, describing the Code, its provisions and, more specifically, the Code complaint process. The regulators in attendance were impressed by DSA's proactive efforts and thanked us for providing another avenue for aggrieved parties to resolve their complaints. We will continue to publicize the Code at various meetings of consumer protection officials, legislators and other law enforcement officials.
So what should you be doing about your own company's self-regulatory efforts? First, if you are a DSA member, you must be responsive to the Code complaints sent through the DSA Code complaint process. Non-responsiveness to complaints may cost you your membership. Second, disseminate the Code to your salesforce! As you know, there is no "independent contractor defense" in the Code; that is, if a member of your salesforce violates the Code, your company is responsible. You must keep your distributors aware of their responsibilities. Finally, be proactive! Let DSA know what you're doing to provide increased protection to your consumers and your salesforce members. Go above and beyond to make sure you're acting to protect your salesforce and to keep your customers happy. This industry prides itself on serving people's needs in a highly ethical manner, and the DSA Code of Ethics is an important tool in this effort.
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Direct Selling News has based this information on sources believed to be reliable; while efforts have been made to assure its accuracy, no guarantee can be made.