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Earlier this year, I had an opportunity to discuss the Direct Selling Association’s (DSA’s) self-regulatory approach at a Direct Selling Education Foundation (DSEF) forum that examined best practices and ideas from various industries. At that time, I dedicated the association to building upon our strong commitment to consumer protection by suggesting we would consider enhancements to the transparency of enforcement in our Code of Ethics.
I am extremely pleased to shed some additional light on what was already announced by Direct Selling News in early June—that effective Jan. 1, 2016, we are introducing some significant changes, recently approved by DSA’s Board of Directors, that make the enforcement actions of the independent Code Administrator more transparent. We are also strengthening policies governing claims by our member companies and their independent salespeople about their products and services and the opportunity to earn income. Finally, we are implementing even greater financial protections for independent salespeople against financial loss.
For those who may not have followed the work of DSA over the years, or are new to the direct selling community, it is important to recognize that this is not the first time we have acted to strengthen our Code, and it certainly won’t be the last. One of the great advantages of self-regulation is the ability to respond to the evolving expectations of consumers and government. The measures DSA will introduce in 2016 are recognition of such changes in the direct selling marketplace and represent a desire to lead all direct sellers—DSA members and non-members alike—to the highest ethical and consumer protection standards by example.
The paragraphs that follow are a summary of the enhancements to DSA’s Code of Ethics that we will introduce next year. DSA members are continuing to discuss implementation and will provide resources to help member companies educate various stakeholders, such as the independent salesforce and the public.
- Product Claims. The modifications call for product claims made by members and their independent salespeople to be substantiated by competent and reliable evidence and not be misleading.
- Earnings Claims. The modifications more clearly define earnings representation under the Code, including that which suggests lifestyle purchases are related to income earned. Claims by companies or independent salespeople must be truthful, accurate and presented in a manner that isn’t false, deceptive or misleading. They must also be documented and substantiated. Prospective salespeople must be given sufficient information to understand that earnings may vary significantly and to conduct a reasonable evaluation of the opportunity to earn income. .
- Inventory Repurchase/Inventory Loading. The modifications prohibit false, misleading or deceptive recruiting practices, including requiring a salesperson to purchase unreasonable amounts of inventory or sales aides. The Code Administrator is empowered to employ any appropriate remedy to ensure that salespeople do not incur significant financial loss, including requiring DSA member companies to repurchase inventory or materials. .
- Transparency. The modifications require member companies to publicize the process for filing a Code complaint, in addition to the Code itself. Furthermore, the Code Administrator is empowered to issue periodic compliance reports, including public reporting. .
As president of DSA, I am personally committed to ensuring that the association be recognized as having the most progressive consumer protection and ethical business practices in the marketplace. Continually examining our policies on ethics and consumer protection and making improvements that respect direct sellers and the marketplace is not only the right thing to do, it’s also a sound business strategy. When companies do the right thing by consumers, sales follow.
Are you interested in DSA’s Code of Ethics and how DSA membership can differentiate your company in the marketplace? Contact Joseph Aquilina at jaquilina@dsa.org to learn more.
Joseph N. Mariano is President of the U.S. Direct Selling Association.
