Concerned about how California Representative Darrell Issa’s proposed legislation impacting disclosure requirements is related to documentation of independent contractors? Interested in staying on top of recent court cases and legislation that impact your success in the direct selling industry? Wondering whether your state legislature is considering a law that could affect your business? Need to know the legal definitions of direct selling terms? Curious about industry trends and research? The Direct Selling Association (DSA) has you covered.
The DSA’s mission: “To protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers.” Many company executives may not realize the wealth of information and resources made available by the DSA.
Their goal is simple and simply stated. “The whole point of the organization is to demonstrate and deliver value to our members,” says Joseph Mariano, President of the DSA. If he and his colleagues had one big wish it would be that direct selling company executives were more aware of the wide range of benefits and services they have at their disposal. “We have the benefit of having a number of people who have worked many, many years here and have really devoted their lives and their careers to direct selling.”
“The whole point of the organization is to demonstrate and deliver value to our members.”
—Joseph Mariano, President
Importantly, Mariano points out, the DSA is not a company—it’s a trade association, which is not-for-profit and is engaged in representing the entire industry, providing significant benefit to its members and the direct selling industry at large. Mariano believes that many members and potential members may not be fully aware of the value DSA provides.
He credits the strong and long-term staff members of the organization for providing the exceptional value that the DSA has been able to offer over the years. And it has been many years that the DSA has actively represented the interests of sales professionals—over a century in fact. The organization was formed in 1910 and was originally called the Agents Credit Association. Its first 10 members included the California Perfume Co., which is now Avon Products Inc. After growing in membership and focus—and following a few name changes—the group now known as the Direct Selling Association was named in 1968 and moved to Washington D.C., where it remains today.
Membership in the DSA provides a wide variety of benefits for direct selling executives, ranging from research services to education and professional development programs to peer networking councils to salesforce support. Some benefits are available to the general public, such as DSA’s informational website, www.directselling411.com, which provides factual information and addresses common myths about direct selling.
Mariano points out that membership in the DSA has significant benefits, especially in the areas of research and data collection. He says, “We use research primarily, although not exclusively, to support our industry advocacy efforts, with the participation of our member companies. The data in and of itself can be an extraordinarily valuable tool for larger companies, but certainly for the smaller companies trying to figure out how they compare to the rest of the direct selling marketplace.” The data can provide insights for direct selling professionals into:
- Where they should be focusing their resources for growth
- What other companies are doing and how they’re succeeding or not succeeding
- Whether their downturn or their upswing is a result of their own skill or is a factor, as it typically is, of trends that are affecting the entire industry
In addition to this targeted research, the DSA’s website, dsa.org, holds a vast storehouse of information that members can access to serve their needs, including such items as guidance on taxes for independent contractors and other IRS issues, information on the differences between legitimate direct selling companies and illegal pyramid schemes, as well as guidelines for offering prizes and gifts to both salespeople and end consumers.
|Rep. Pete Sessions (R-Texas) is the latest recipient of DSA’s Champion of Free Enterprise Award. The award was presented in September 2012 by DSA President Joseph Mariano (left) and the current Chairman of the DSA, Brent Chapman (right), Herbalife’s General Counsel.||DSA President Joseph Mariano (right) speaks with Beachbody CEO Carl Daikeler at DSA’s largest educational and professional development event, the DSA Annual Meeting in June 2012.|
Government, Legal and Regulatory
Government relations is another significant focus of the organization, notes Mariano, and something that he feels members are not as fully aware of as they could be. While he recognizes and understands the tendency of many companies, especially smaller ones, to be not particularly interested in politics or government, he believes that the companies that don’t participate “are missing a great opportunity to develop relationships and a rapport with their own officials.” Those relationships, he says, “can ultimately really rebound to the benefit of that company tremendously in the local community.” Mariano encourages companies to reach out to the DSA for assistance in helping them forge these relationships.
In the last year the DSA has provided resources to voters and the general public that publicize the voting histories of politicians at national and state levels, and identify those “champions of direct selling” who support legislation and are regulation friendly to direct sellers. On the website www.legislativerecognition.dsa.org, DSA writes, “Promoting legislation is not a simple task, and often requires a great deal of time, effort and dedication to ultimately craft good policy. The DSA Government Relations staff and executives from member companies reach out to legislators and elected officials from both political parties. These individuals then engage and educate their fellow lawmakers on the benefits of direct selling, and the critical nature of laws that encourage entrepreneurship and economic growth.”
Visitors can click on an interactive map of the United States to see short profiles of the champion and what legislation or efforts they have supported.
Truly, the impact of DSA’s lobbying and legislative activities is chief among the benefits for the entire industry. There are a multitude of governmental, legal and regulatory issues that impact those in the direct selling industry, from independent contractor tax issues to the regulation of door-to-door sales to a significant number of bills introduced in Congress. In fact, the DSA is currently monitoring dozens of issues and proposed legislation across the country. DSA keeps an updated listing of these issues; but even more important, the DSA’s Political Action Committee (DSAPAC) lobbies actively on members’ behalf to influence the outcome of these issues.
The DSA takes a position on each and every item—they could be Neutral, meaning there appears to be no impact on the industry; they could Support the item, or they could Oppose/Amend the item. When an item is opposed or needs to be amended, the staff works with lawmakers and others to help them understand the impact, sometimes unintended, of the proposed item.
“A great deal of our activities has to do with educational issues, market access and a continually changing marketplace,” says Adolfo Franco, Vice President, Global Affairs, for DSA.
A lot of the challenges of regulatory work will always be ongoing, he says. Despite what may be good intentions at the federal or state level, a lot of regulatory activity has negative consequences for direct sellers. “We need to point those things out, correct them and promote the industry to show how we’re making a huge impact on the American economy.”
Franco also points out that some legislative or regulatory efforts may be honest attempts by lawmakers to accomplish other agendas, but will have a detrimental effect on direct sellers. “Then it’s incumbent upon us,” he says, “to step to the plate and take the leadership as the trade association speaking on behalf of our nearly 200 member companies and getting them behind us.”
It’s truly a never-ending process. Bills that would negatively impact the industry are constantly being introduced at both the national and state levels, and the DSA monitors each and every one of them for potentially adverse effects. There is a bill, for example, currently in the Massachusetts House Committee on Ways and Means (MA H 4118) that would provide municipalities with authority to require an annual licensing fee of $50 from every “residential commercial seller.” The DSA opposes this bill as it is written, as it would add undue burdens on all direct sellers.
Franco also says that the association is constantly facing challenges related to the definition of independent contractors, which has a significant impact on the industry. “Appropriately defining independent contractor status is paramount.”
Franco points out that there are some who believe independent contractors should be treated as employees. He believes that while this would not destroy the model, it would certainly impact it in areas ranging from withholding to unemployment compensation to benefits. The staff at DSA evaluates all legislation that touches on these issues and actively works through lobbying efforts, personal relationships and education to protect the independent contractor status.
The DSA has its eyes and ears attuned to any legislation that could have negative effects on the industry. In another example, WA HB 1440, a bill sponsored by Representative John McCoy (D-Wash.), has been introduced that would create a presumption that an employer-employee relationship exists when a person performs services for remuneration. The DSA has opposed this bill and has actively worked to raise awareness and support against it, because it could require that all direct selling companies treat independent contractors as employees until they prove to the Washington Department of Labor and Industries otherwise. Until that occurs this bill could require the companies to complete paperwork and withhold taxes and even collect worker’s comp and unemployment monies from their salespeople. Clearly this would impede or even cripple companies.
In contrast, the DSA supports House Assembly bill US H 6653—the Independent Contractor Tax Fairness and Simplification Act of 2012, which seeks to create a new safe harbor for companies using independent contractors and was sent to the House Ways & Means Committee in December 2012.
These are the kinds of issues that all direct sales professionals need to be aware of, but few if any have the time, resources or clout to successfully monitor—let alone influence—the outcomes of such actions. Fortunately, for DSA members and the entire industry, DSA does.
In addition to remaining up to date and working to influence policy and regulations, the association has a major focus on education—of members and markets—and most notably a focus on molding industry perceptions.
Molding Industry Perceptions
When an industry is represented by over 50 million independent contractors worldwide, and each has a personal touch incorporated into their selling methods, issues can develop that uniform brands such as General Motors or Coca-Cola don’t face. The fact that individuals from all walks of life can build independent businesses is one of direct selling’s greatest strengths. It can also create challenges with misinformation and misperceptions. The DSA plays a key role in the process of shaping industry perceptions; in fact, it is a major area of focus.
“Over the last five years, and particularly over the last two or three, I think there is an unprecedented understanding on the part of our members and certainly among company leaders that the industry as a whole has to get out there and aggressively address the perception of the industry,” says Mariano. “We’ve devoted more resources as an association to that than ever before in so many ways.”
Amy Robinson has a significant impact here in her role as Senior Vice President and Chief Marketing Officer for the DSA. She makes an important distinction between the initiatives and actions that members take to promote their companies and what the DSA does to promote the industry. While member companies all have their own unique products, programs and selling mechanisms, there are certain key issues that unite them. She says, “What we try to do as an association is to identify those things that unite all direct sellers on common ground. We focus on these things to help the public understand what direct selling is fundamentally all about. This allows the companies and their independent contractors to focus on their specific company and products, without having to explain the entire industry.”
“What we try to do as an association is to identify those things that unite all direct sellers on common ground.”
—Amy Robinson, Senior Vice President and Chief Marketing Officer
That difference in focus is not always clearly understood, acknowledges Mariano. But, as he, Franco and Robinson stress, as a trade association the DSA is focused on industry issues, not individual company issues. It doesn’t lobby on the behalf of individual organizations, but on behalf of the direct selling industry as a whole. However, through those efforts, individual companies ultimately benefit.
From an individual company standpoint, says Robinson, the goal is to help them focus on what they know best—their own products—rather than needing to be industry spokespeople or supporters.
Mariano adds, “We provide a fulcrum, a focus if you will, for company executives to come together, share information and make decisions.” Indeed, events over the last year have highlighted the value of the DSA’s work even more. From attacks in magazine articles to short sellers impacting stock prices by spreading misinformation, those opposed to the industry are seeking ways to be heard. The DSA’s efforts to strengthen public understanding of the industry and its many benefits have never been more necessary than now. “I think it’s clear that there are misunderstandings about the channel,” he says. “That hurts everybody and is a disadvantage to us in the marketplace.”
Franco says, “There is a difference between a company being under attack and the model being under attack. The role the association can play is by speaking as the trade association, as the entity charged with explaining not a company’s particular challenge, be it regulatory or otherwise, but exactly what direct selling is and why it’s legitimate.” That role, he says, is uniquely DSA’s as a trade association.
It’s an important role because laying the foundation for the industry as a whole ultimately benefits all. Mariano adds, “No matter how good your individual company brand may be and how much progress you’ve made in promoting your own company, if there is a question about the underlying business method then the industry really has to answer that cohesively and uniformly.” And that is what DSA is continually striving to do.
Though this article has focused on the efforts of the U.S. DSA, trade associations for direct selling are established all over the world. There are actually two groups that represent the various DSAs: the World Federation of Direct Selling Associations, and Seldia, the European Direct Selling Association. Over 58 countries have established a direct selling trade association within their borders to accomplish the same work that has been described here.
The staff at these associations, along with the member company executives who carry out much of the work and effort with them, take seriously their responsibility to protect and defend an entrepreneurial opportunity and way of life that we call direct selling.
The Direct Selling Education Foundation (DSEF)
The DSA would be remiss, says DSA President Joseph Mariano, if it did not note the significant contributions that have been made by the Direct Selling Education Foundation, which was created by DSA 40 years ago as a charitable, not-for-profit arm. DSEF engages the academic community, the consumer protection community and the entrepreneurial community about direct selling, but also about other issues to build credibility with those audiences so they have a better understanding of direct selling.
DSEF’s board of directors comprises representatives from institutes of higher learning and consumer advocacy organizations, as well as corporate leaders in the direct selling industry. Executive Director Charlie Orr oversees the daily operations of the DSEF, and communicates regularly with its board. DSEF’s focus is on helping its supporters, and DSA members, by building relationships with key collaborators, including the Better Business Bureau, the Federal Trade Commission and the National Association of Community Colleges. These relationships help to combat pervasive stereotypes that DSEF and DSA continue to work to overcome.
The different focuses of the two organizations can be summed up like this: DSA is focused on promoting and protecting the industry. DSEF is focused on engaging and educating outside stakeholders, the public—and direct sellers.